NCS Multistage (NasdaqCM:NCSM) Conference Transcript

NCS Multistage Conference Call Summary Company Overview - Company: NCS Multistage (Ticker: NCSM) - Industry: Oil field services and equipment - Market Capitalization: Approximately $115 million - Trailing 12-month EBITDA: Approximately $26 million - Free Cash Flow: Approximately $20 million - Revenue for 2025: Expected to be close to $180 million, representing about 2% market share in a nearly $10 billion addressable market for oil field services in 2025 [5][18] Core Business and Product Lines - Focus: Technology-driven solutions for oil and natural gas producers, including major companies like Chevron, BP, and Saudi Aramco [2][3] - Product Lines: 1. Fracturing Systems: Accounts for about 60% of revenue; helps maximize resource recovery [5][6] 2. Repeat Precision: Second largest product line, known for high-performance composite frac plugs [8][9] 3. Tracer Diagnostics: Provides cost-effective services to improve well designs and optimize field development [10][11] 4. Well Construction: Features the AirLock casing buoyancy system, aiding in drilling longer laterals [12][13] Strategic Focus and Growth Opportunities - Market Positioning: Aims to build on leadership in fracturing systems and capitalize on high-margin growth opportunities, particularly in international markets [15][19] - International Revenue Growth: More than doubled in 2024 compared to 2023, increasing from about 5% to 10% of total revenue [17] - Acquisition of ResMetrics: Enhances Tracer Diagnostics capabilities, with trailing 12-month revenues of over $10 million and an EBITDA margin of over 30% [20][22] Financial Performance and Projections - Revenue Growth: Grew by 14% or $20 million in 2024; projected 8% growth in 2025, with 5% from organic initiatives and 3% from ResMetrics acquisition [27] - Gross Margin: Approximately 40%, improved by about 250 basis points in 2024 compared to 2023 [28] - Free Cash Flow Generation: Expected to convert about 50%-60% of Adjusted EBITDA to free cash flow [30] Market Dynamics and Competitive Landscape - Challenging Market Environment: Despite a flat-to-lower completion count and reduced rig count in the U.S., NCS is gaining market share through differentiated products [35][36] - International Expansion: Significant growth opportunities identified in unconventional markets like Argentina (Vaca Muerta) and the Middle East [42][44] Investor Considerations - Valuation: Currently trading at about four times enterprise value to 2025 EBITDA, which is a discount compared to peers [31] - Shareholder Support: Advent International holds over 50% of shares and has been supportive of management and strategic initiatives [46][48] Conclusion - Investment Opportunity: NCS Multistage presents a compelling investment case with strong organic growth, innovative technology, and a capital-light business model that generates free cash flow through industry cycles [32][33]