NCS Multistage Holdings, Inc. Q3 FY2024 earnings call

• Revenue: Third quarter revenue $44M (+15% y-o-y), first nine months $118M (+10% y-o-y). Adjusted gross margin 42% (high end of guided range).
• Expenses: SG&A for Q3 2024 $14.1M, $1.5M higher than Q3 2023; but first nine months SG&A lower by $0.5M y-o-y.
• Adjusted EBITDA: Q3 2024 adjusted EBITDA $7.1M (exceeded guided range), first nine months $14.1M (+$4.6M y-o-y).
• Strategies: Build leading market positions (e.g., fracturing systems in Canada, Tracer Diagnostics in international markets), capitalize on international/offshore opportunities, commercialize innovative solutions (e.g., larger frac sleeve for 7-inch casing, high-pressure AirLock, dissolvable frac plug trials).
• Balance Sheet: As of Sep 30, 2024, cash $15.3M, total liquidity over $37M, net cash position $6.7M.

Third quarter revenue was $44 million, a 15% increase year-over-year. First nine months of 2024 revenue was $118 million, a 10% increase over the same period last year. International revenue for the first nine months of 2024 was $12 million, representing 10% of total revenue (up from 5% in the same period last year). Adjusted gross margin was 42% for the third quarter, supported by margin-accretive international revenue. U.S. revenue was up, Canada revenue had a modest increase, and international revenue saw a significant 89% increase in the third quarter.

• Fourth Quarter Guidance: Total revenue $38M-$42M; Canadian revenue $26M-$28M; U.S. revenue $9M-$10M; international revenue $3M-$4M; adjusted gross margin 40%-42%; other income $1.1M-$1.3M; adjusted EBITDA $4.0M-$6.5M.
• Full Year 2024 Guidance: Expected full year revenue $155.5M-$159.5M (11% increase y-o-y); adjusted EBITDA $18M-$20.5M (midpoint $19.3M, +$4.3M from initial guidance); net capital expenditures ~$1.2M; free cash flow $6M-$10M; cash position over $20M at year end.

Q: Touch on product sales in U.S. and Canadian markets, typical cadence?

A: Ryan Hummer says sales have short lead times, not inventory build.

Q: International markets, timing of tracer work in Middle East?

A: Ryan Hummer explains revenue recognition phases for Tracer Diagnostics in Middle East (injection, sampling, reporting) leading to slow, bit-by-bit revenue recognition.

Q: Expense front, low-hanging fruit?

A: Ryan Hummer says beyond low-hanging fruit, ongoing cost reduction efforts.

Q: 2025 seasonal cadences?

A: Ryan Hummer discusses expected activity in U.S., Canada (LNG Canada commissioning), Argentina, Norway, Middle East.

Q: Well complexity impact on NCS?

A: Ryan Hummer talks about longer laterals benefiting casing buoyancy systems, dissolvable plug trials, and geothermal/CCS applications.

Q: Geothermal and CCS diversifying revenue?

A: Ryan Hummer explains tracer use in geothermal, fracturing systems for geothermal/CCS, and CCUS well testing with NCS technology.