NCS Multistage(US:NCSM)2023-10-31 17:20Financial Data and Key Metrics Changes - The third quarter revenues were $38.3 million, a 22% decrease compared to the same quarter last year [19] - Gross profit percentage was maintained at 41%, slightly below the previous year's percentage [43] - Adjusted EBITDA for the third quarter was $6.8 million, with an adjusted EBITDA margin of 18%, an improvement from 17% year-over-year [44] Business Line Data and Key Metrics Changes - Canadian revenues decreased by 19%, US revenues were down 30%, and international revenues decreased by 18% [19] - The company reported a net income of $4.4 million for the third quarter, an increase from $3.9 million in the same period last year [44] - Selling, general and administrative costs were $12.7 million, down by $2.7 million compared to the third quarter of last year [69] Market Data and Key Metrics Changes - Canadian revenues were impacted by a declining rig count due to commodity price volatility and Canadian wildfires [68] - US sales continued to be affected by lower natural gas prices, negatively impacting customer activity levels [68] - Sequentially, revenues in the third quarter increased by 51%, with Canada up almost 100% and international up by 26% [68] Company Strategy and Development Direction - The company aims to build upon its leading market positions and capitalize on international and offshore opportunities [5][10] - A multiyear project is underway with a leading international oil company to develop technology for deepwater offshore applications [8] - The company is focused on commercializing innovative solutions to complex customer challenges, with several new products available for field trials [35] Management's Comments on Operating Environment and Future Outlook - Management believes the company is in a multiyear cycle of improved growth and earnings prospects for the industry globally [73] - There is optimism about modest growth in rig activity in the US in the fourth quarter, with potential for further growth in 2024 [73] - Continuous improvement efforts are being made to enhance efficiency and support gross margin percentage [74] Other Important Information - The company settled one outstanding legal matter and expects both matters to be settled within insurance coverage limits [15] - An inaugural ESG report was released, highlighting the company's commitments to various stakeholders [16] - The company maintains a net cash position with an undrawn revolver and generated higher adjusted EBITDA compared to the same period in 2022 [38] Q&A Session All Questions and Answers Question: Commentary on product development for deepwater - Management discussed the transition from shallow water offshore to deepwater applications, highlighting the potential for multi-well opportunities in the future [52] Question: Drivers of strong EBITDA despite revenue decline - Management attributed the strong EBITDA to continuous improvement efforts, facility rationalizations, and efficient cost management [60] Question: Bidding environment in the Middle East compared to Canada - Management explained the long process of qualification in the Middle East, particularly with Saudi Aramco, and the progress made in cataloging multiple product lines [84]