NCS Multistage(US:NCSM)2024-03-08 16:01Financial Data and Key Metrics Changes - In 2023, the company experienced a year-over-year revenue decline of 8%, with total revenues for the year at $142.5 million compared to the previous year [3][11] - The adjusted EBITDA for 2023 was $11.9 million, a decrease of $3.2 million from 2022, while the adjusted gross margin remained consistent at 39% [11][38] - The fourth quarter revenues were reported at $35.2 million, a 12% decrease compared to the same period last year [10][12] Business Line Data and Key Metrics Changes - Canadian revenues increased by 1%, while U.S. and international revenues decreased by 33% and 40%, respectively [10] - The company successfully completed its first fracturing systems job in Canada for oil sands applications, indicating growth in this segment [5] - The introduction of new technologies, such as the SlimStim refrac liner hanger system, aims to enhance operational capabilities and customer offerings [7] Market Data and Key Metrics Changes - The U.S. market saw a decline in activity levels, with expectations of a further 10% decrease in 2024 compared to 2023 [58] - In Canada, while activity started strong, a similar trend of declining year-over-year activity was observed in the latter half of 2023 [56] - The company anticipates modest growth in international markets, particularly in the North Sea and the Middle East, in 2024 [14][45] Company Strategy and Development Direction - The company aims to grow revenue in a flat or declining market while improving adjusted EBITDA margins and generating free cash flow in 2024 [9][45] - Strategic investments will be made to support growth, particularly in new markets and product offerings [49] - The focus will be on continuous improvement and cost reduction to enhance operational efficiency [49] Management's Comments on Operating Environment and Future Outlook - Management expressed a cautious outlook for 2024, expecting lower overall market activity in North America but anticipating growth in international markets [14][31] - The company is optimistic about the potential for growth in tracer diagnostics, particularly in the Middle East, which could become a significant market [62] - Management highlighted the importance of adapting to market conditions and leveraging technology to meet customer needs [69] Other Important Information - The company ended 2023 with a cash balance of nearly $17 million and a positive net cash position of $8.6 million [15][44] - A legal settlement in Texas resulted in no cash payment by the company, positively impacting net income for the fourth quarter [12][63] - The company is tracking numerous field trial opportunities, which are expected to contribute to long-term growth [20] Q&A Session Summary Question: What are the potential upside surprises in the Canadian market? - Management indicated that while the Canadian business is expected to be relatively flat, there are opportunities for growth through higher sleeve density in completions [79] Question: How many more cost-saving levers can be pulled? - Management stated that while they will continue to focus on efficiency, they do not anticipate pulling the same level of cost out of the system as in 2023 [81] Question: What factors contributed to the recent customer wins? - Management highlighted extensive testing and positive results from customer interactions as key factors in securing new business, particularly in the Permian Basin [76]