NCS Multistage Holdings, Inc. (NCSM) Q2 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reflects strong financial performance with revenue exceeding expectations and improved EBITDA. Q2 revenue was the highest since 2019, and net income turned positive. Despite a slight decline in margins, cost management improved. The Q&A highlighted growth opportunities, particularly in Canada and international markets, and management's cautious optimism. Although there was some lack of clarity in guidance tightening, the overall sentiment is positive, supported by new customer wins and strategic focus on synergies and international expansion.
Key Financial Performance
Second Quarter Revenue $36 million, exceeded the high end of the guided range by more than $7 million, reflecting better-than-expected performance in each geography.
First Half Revenue Over $86 million, which is 18% or nearly $13 million higher than the first half of 2024, anchored by strong performance in Canada.
Adjusted EBITDA (Q2 2025) $2.2 million, exceeded the guided range of negative $2 million to breakeven, representing a year-over-year improvement of $1.3 million.
Adjusted EBITDA (First Half 2025) $10.4 million, an increase of $3.4 million or 49% compared to the first half of 2024.
Canada Revenue (First Half 2025) $56 million, increasing 27% compared to the same period in 2024, driven by strong performance in fracturing systems and composite plugs.
Second Quarter Revenues (Detailed) $36.5 million, highest second quarter revenue since 2019, representing a year-over-year improvement of 23%. Canada revenues improved by 49%, U.S. revenues improved by 15%, and international revenues decreased by 17%.
Adjusted Gross Profit (Q2 2025) $13 million, with an adjusted gross margin of 36%, down from 40% a year ago due to the mix of products sold and services provided.
Selling, General and Administrative Costs (Q2 2025) $13.6 million, down by $1.2 million compared to the same period last year.
Net Income (Q2 2025) $0.9 million, or diluted earnings per share of $0.34, an improvement compared to the net loss of $3.1 million or a loss per share of $1.21 in the prior year.
Cash on Hand (June 30, 2025) $25.4 million, with total debt of $7.7 million, resulting in a positive net cash position of $17.7 million.
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Operating Highlights
7-inch sliding sleeve and service tool: Successfully ran for a remedial cementing application, with positive customer feedback and subsequent orders.
Stage saver composite frac plug: Strong uptake in the U.S. and Canada, designed to mitigate issues during simulfrac operations.
Canada: Revenue for the first half of 2025 was $56 million, a 27% increase compared to 2024, driven by strong performance in fracturing systems and composite plugs in Montney and Duvernay plays.
North Sea: Increased customer base from 5 in 2024 to 7 in 2025, with multiple successful operations and long-term growth expected.
Middle East: Expanded presence with a commercial purchase agreement and transition from radioactive to chemical tracing.
Revenue growth: Second quarter revenue of $36 million exceeded guidance by $7 million, with a 23% year-over-year improvement.
Adjusted EBITDA: Improved to $2.2 million in Q2 2025, a $1.3 million year-over-year increase.
Acquisition of ResMetrics: Acquired for $7.15 million, adding complementary tracer diagnostics technologies and expanding presence in the Middle East.
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Risk or Challenges
Market and Industry Conditions: Deterioration in market and industry conditions, including a decline in the U.S. rig count, slower-than-normal rig count recovery in Canada, potential oversupply in the oil market due to increased OPEC+ oil supply, and ongoing uncertainties related to tariffs and trade.
International Revenue Decline: A 17% decrease in international revenues, primarily due to timing delays in tracer diagnostic projects in the Middle East.
Product Mix Impact on Margins: Adjusted gross margin decreased from 40% to 36% year-over-year, primarily due to the mix of products sold and services provided.
Seasonal Decline in Canada: Sequential revenue decrease of 27% in the second quarter due to the normal seasonal decline in Canada resulting from spring breakup.
Integration Risks: Potential challenges in integrating ResMetrics, including the need to validate workflows and implement best practices, which may take time.
Economic and Strategic Uncertainty: Uncertainties related to tariffs, trade, and economic conditions that could impact strategic execution and financial performance.
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Guidance & Outlook
Third Quarter 2025 Revenue Guidance: Expected total revenue in the range of $42 million to $46 million. Canadian revenue is projected at $25 million to $27 million, U.S. revenue at $12 million to $13 million, and international revenue at $5 million to $6 million.
Third Quarter 2025 Adjusted Gross Margin: Expected to range from 40% to 42%.
Third Quarter 2025 Adjusted EBITDA: Expected to range from $5.5 million to $7.0 million.
Full-Year 2025 Revenue Guidance: Annual revenue is projected to range from $168 million to $176 million, representing year-over-year growth of 6% at the midpoint. Including ResMetrics, the combined revenue guidance range is $172 million to $181 million.
Full-Year 2025 Adjusted EBITDA Guidance: Adjusted EBITDA is projected to range from $21 million to $24 million, with a midpoint of $22.5 million. Including ResMetrics, the combined adjusted EBITDA guidance is $22 million to $25.5 million.
Full-Year 2025 Free Cash Flow Guidance: Free cash flow after distributions to noncontrolling interest and excluding the cash paid to ResMetrics is expected to range from $7 million to $11 million.
ResMetrics Contribution to 2025: ResMetrics is expected to contribute an additional $4 million to $5 million of revenue and $1 million to $1.5 million of adjusted EBITDA for the last 5 months of 2025.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:What opportunities do you see for cross-selling between ResMetrics and tracer diagnostic customers?
A:The company sees opportunities for revenue synergies by combining ResMetrics' service offerings with tracer diagnostics. ResMetrics generated about $10 million in revenue over the trailing 12 months, while tracer diagnostics generated $15-20 million, resulting in a combined $25-30 million. They aim to expand the use cases for tracer diagnostics and take market share, though no specific revenue numbers were provided.
Q:Are there any regions you are particularly excited to target internationally?
A:The company is focusing on the North Sea and the Middle East, with ResMetrics broadening their presence in the Middle East. They are also exploring offshore markets like the Gulf of America, leveraging their success in shallow water offshore technology.
Q:What would give you the confidence to tighten your guidance range in Q3?
A:The company is monitoring the Canadian rig count, which is currently 10-15% below last year. If the rig count narrows this gap, they would have more confidence to tighten the guidance range.
Q:What are the margin opportunities for the ResMetrics business over the next few years?
A:The company plans to adopt best practices across both organizations to reduce costs, such as optimizing chemical usage and calibration methods. They estimate operational synergies could generate $1-2 million in savings over the long term.
Q:What is the mindset of Canadian and U.S. customers given recent market volatility?
A:In the U.S., customers are cautiously optimistic but are in a wait-and-see mode due to concerns about OPEC+ actions and potential oversupply. In Canada, activity was pulled forward earlier in the year, and the market is reassessing forecasts. Gas-directed activity has been curtailed due to weak local gas prices, but there is confidence in activity picking up later in the year.
Q:How much growth in Canada is coming from new customer wins versus expanded activity with existing clients?
A:Growth is driven by new customer wins in the Montney region, where customers run more sleeves per well, and by trials in other markets. Some customers are drilling longer laterals and using tighter stage counts, increasing sleeve usage. The company expects continued outperformance relative to the market.
Q:Were there any competitive price concessions or input cost headwinds affecting margins?
A:No significant price concessions were made. Margin impacts were due to product and service mix, particularly fewer high-margin tracer projects in the Middle East compared to last year.
Q:How are project-level profitability and payment terms trending in the Middle East and North Sea?
A:The North Sea has quick-paying customers and good margins. In the Middle East, payment terms are longer due to operating through local partners, but this is accounted for in pricing. Both regions generally provide better-than-average corporate margins.
Q:Review of Unclear Management Responses
A:Management avoided providing specific revenue synergy numbers for the ResMetrics and tracer diagnostics combination, and their response to tightening guidance lacked clarity on other factors beyond rig count.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
LLC
NCS ResMetrics
ResMetrics NCS
ResMetrics cash
ResMetrics tracer
acquisition ResMetrics
addition ResMetrics
amount
asset income
call
cash hand
chemical
completion
diagnostics product
diagnostics project
economy scale
hand acquisition
head
increase construction
increase system
integration
loss
oil
practice
provider
purchase
sale plug
service offering
sic
simulfrac
sleeve
system sale
tax asset
tax benefit
tracer diagnostics
tracer portfolio
tracing
transaction
yesterday closing
NCSM Transcript
NCS Multistage Holdings, Inc. (NCSM) Q1 2026 Earnings Call Transcript
Unknown4-30
The earnings call presents a mixed outlook. While there is improvement in cash flow and a positive net cash position, the decline in EBITDA and pressure on gross margins are concerning. The guidance indicates potential recovery and expansion opportunities, particularly internationally, but uncertainties remain, especially in Canada. The Q&A reveals some positive sentiment towards future projects and market expansion, yet there are constraints and risks, such as hiring challenges and macroeconomic uncertainties. These mixed signals suggest a neutral stock price movement in the short term.
NCS Multistage Holdings, Inc. (NCSM) Q4 2025 Earnings Call Transcript
Positive3-5
The earnings call indicates strong financial performance with a 13% revenue increase and improved EBITDA margins. Despite challenges, the company shows operational efficiency and a positive cash position. The Q&A section highlights promising market opportunities and successful integration of ResMetrics. The guidance remains optimistic, with growth in deepwater markets and enhanced recovery technologies. Overall, the sentiment is positive, likely leading to a stock price increase in the next two weeks.
NCS Multistage Holdings, Inc. (NCSM) Q3 2025 Earnings Call Transcript
Positive10-30
The earnings call revealed strong financial performance, with significant revenue and EBITDA growth, particularly in the U.S. market. The successful integration of ResMetrix and promising opportunities in the Middle East and North Sea further enhance prospects. Despite some concerns about Canadian rig counts, the company plans to defend margins and grow market share. Shareholder returns are supported by a positive net cash position. The Q&A session provided additional confidence in strategic execution and market expansion, justifying a positive outlook for stock price movement.
NCS Multistage Holdings, Inc. (NCSM) Q2 2025 Earnings Call Transcript
Positive8-1
The earnings call reflects strong financial performance with revenue exceeding expectations and improved EBITDA. Q2 revenue was the highest since 2019, and net income turned positive. Despite a slight decline in margins, cost management improved. The Q&A highlighted growth opportunities, particularly in Canada and international markets, and management's cautious optimism. Although there was some lack of clarity in guidance tightening, the overall sentiment is positive, supported by new customer wins and strategic focus on synergies and international expansion.
NCSM Report
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