NCSM - Earnings call transcript Q2 2018 | NCS Multistage Holdings, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, ladies and gentlemen, and welcome to the Second Quarter 2018 NCS Multistage Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today’s conference, Mr. Ryan Hummer, Chief Financial Officer. Sir, you may begin.

Ryan Hummer

Joelle. you, Thank for call. you Multistage’s quarter second And joining conference XXXX thank NCS

Our Robert led Executive be call will today by I also Officer; will Nipper, provide comments. and Chief our

protections that with measures to on associated measures our performance. non-GAAP regard over are current historical our believe our contain harbor consistently today, law. known of relying us Commission with structure reflects which the begin we we time I to remarks forward-looking Exchange time earnings today’s those to that made adjusted a net are to and forward-looking and today we performance release better public operating safe could release costs performance. our be conference Securities like performance share We net by capital need information, afforded Such press diluted will out in of information call, last future of risks. in use operating because our that this adjusted will adjusted I’d and issued statements these have operating income also that the federal are compare the statements other that we EBITDA Before allow and EBITDA, statements to regarding filings earnings per comments we’d adjusted like our night discussed to without in to manner and a they various that to made please ongoing refer financial and outline margin, may some point periods to caution with refer note call the and number subject of from include unknown call be risks. than risks, on you other and listeners extent that to along

I’ll these turn measure. reconciliations income, Our posted said, from our to over our With GAAP the the Officer, nearest financial press measures Robert of website, ncsmultistage.com, which net yesterday, financial that Chief non-GAAP Executive on release provides is call to Nipper.

Robert Nipper

U.S. our welcome some analysts conference our the are call. quarter Thanks, touch second Ryan, I’ll and review highlights XXXX from employees quarter seeing over I’ll to joining in investors, what we and of and on to more which some of turn I’d accomplishments. the Canadian, and I’ll some touching operations, earnings it the quarterly our discuss second to will like closing on Today International after detail. Ryan also recent provide our in remarks results

Total Our EBITDA with the operations, margin of for $XX.X quarter saw by breakup, lower longer-than-expected was Canadian business second of reflective the quarter execution of the results XX% the quarter the Adjusted period. to and period. as second improvement spring impact and quarter $XX.X year-ago was was than the seasonal continued our while a revenue XX% our of strategy. XXXX. million in second $X.X million in the in second reflect the a Canada XX% EBITDA XX% adjusted Starting result, in demonstrate of higher compared our in of year-ago over a we quarter our an revenue second

higher Our the than for million Canadian $XX of the in months year six period. was by revenue first the of year-ago X%

Canada For half during lower average first of X% count context, XXXX the was rig during XXXX. the than in

customers schedules the completions the note July, $XX Canadian that markets began spring in of competitors in lawsuit revenues One to infringing is one our that the be quarter high-value the on to reminder, success of July of that increases typically to several – our lawsuit activity technology to have had mid significant XXXX. enables the we methods. a patents market. fracturing item share late we support as This pick in quarter and adding drilling As develop our due the business differentiated Business to related the late revenue intellectual tools filed firm to similar offering Canadian third and today. customers growing is breakup. Despite make XXXX, in a lower such to of that provide market the in in in of the million second and filed of to rate adjustments in in in and Canada and for our and certain protect this Canadian quarter XXXX late continues to we currently our Canada expect revenues we customers. believe reflects lowest FX quarter as investments operations Canadian our to Cardium up up from We made to intensity to we well our the continue the a in we’ve third completions against in as continued had to because property our is our we

deem continue We and property innovations will develop. protect infringing take from worked necessary continue to we to our intellectual monitor may competitors to people we’ll our IP steps that on that the our to and hard have be so benefit

the Turning U.S. now to

second period higher $XX.X sequentially. was was in XX% and the million than revenue XX% Our quarter for higher of the year-ago

measure systems third delivered quarter, growth in product increased activity product and U.S. we revenues was composite in of straight primary sequential same the during XX% categories, sliding any AirLock unit of industry each sleeves, period. For of casing total the plugs. excess in growth our of buoyancy Sequential

improved activity Our impacted alleviation performance XX% chain the service that supply sequentially, strong bottlenecks diagnostics the and first completion revenue in industry of the quarter. tracer the in reflecting by U.S.

indicated in worked the over now systems we able last directly where have customers offer than linked of last the our flexibility the Repeat As and quarter more XX customers. This and quarter’s initiatives base target those to XX customers fracturing for call, can been last is we’ve advantages over to months, on success to grow pinpoint the being completion operational with significant as methods. completions majority traditional applications compared specific to pinpoint customer

the on grow of will the on momentum pricing differentials a by increased over season. I this know build driven strong U.S. one that our continue has for popular third the to revenue quarter and quarter XX% basis, we will in primarily earnings a that topic been We expect sales. the second that sequential Permian product in our

pipelines we seen indications this Permian commissioned. into While activity anticipate our of we base completions construction a the reductions XXXX, move XXXX potential growth there activity the and do within any at be in could we rate that have time, and are late generally until in customer in of not Basin under as slowdown the

our activity. the that I’ll us for one quickly us to the you for utilizing provide significant in truck we in night pickup is or generated systems in and our is our a the Basin, all service the or to our shift the changes for remind typically a business need for to job industry tools services. fracturing services, tracer model amount While person personnel-like for and allows of U.S. capital day shift, activity one Permian diagnostics react

as to of other our of services, skill through products Additionally, optimize customers grow can increased both development and in we enable market place. provider technologies a penetration efficiencies Permian continue the that programs, to increase and to our in and

for $X.X $X.X million quarter. higher quarter revenue of our the the of slightly international from first million revenue was Our second than

a of factors of to time XX% are relative the delays performance that our expectations weakening our North takeaway dollar project in trailed and the in year, year a regarding While to during of additional in handful international anticipate of the further our revenue to guidance we the in our was I’ll is growth work for end reductions of currently including the with the half shortfall be to the basin Sea, due to half address strengthen the Permian this oil will we offshore based caution XXXX XXXX. million related crude quarter, actual activity Canada. which of second on and which seeing We compared top operate, the price customer year-to-date million. remarks. in the we $X on to closing full revenue what revenue result in Basin we’re results of Canadian differentials XX% potential in the between to international to reduction constraints my to XQ Based year countries expect XXXX guidance and the revising range revenue through our first a $X initial of The and U.S. of guidance to each dollar our the level the rate as since

operations. We U.S. turn continue Ryan to from in to anticipate more call that to over come I’ll most of our now year-over-year detail. growth this financial our will results the discuss

Ryan Hummer

Thank you, Robert.

revenue in revenue higher more expense, quarter million amortization to the million XX% was As quarter total offset compared release, Canada. was The quarter, driven seasonal than basis, the reflected XX% decline in our $XX.X cost depreciation defined and or in sales XX% sequential XXXX our XXXX. of completion and to Precision from tracer contributions in our million, revenues, of Precision. the as diagnostic quarter. prior contribution the second also in quarter, second were product as is increased activity, less quarter yesterday’s in and Repeat first in million the a the revenue by or than $XX.X of second as prior-year year an $XX.X Gross mix revenue to XX% from from higher profit, sales and XX%. compared in Spectrum due increased This in industry revenue sequential of strong intensity, by the $XX Repeat U.S. the excluding was lower inclusion increase performance revenue in to second total in was revenue the in second increase of increase compared revenues revenue the services earnings On

gross million revenue For Selling, first million to XX% comparison, the second $XX administrative and XXXX. was first years’ or in prior $XX.X the of a the and million $XX.X of from quarter quarter sequential in the million $XX.X quarter. quarter second in cost profit general in increased

our increases related As the The a support well increase of to certain as compensation, SG&A bonus expenses. year-over-year our driven includes by share salaries, higher headcount to to based based reminder, compensation Spectrum’s share non-recurring business, reported growth increased and accruals, additions as operations. was SG&A

and investments related between to million. of international $XX to markets to For we certain enforce quarter, our nonrecurring earlier our the described be actions Robert we property. making includes are $XX the compensation legal million and SG&A reported in items expect inclusive costs and third share-based intellectual This

Our capital second revenue prior second to we quarter. million, EBITDA quarter, in second a quarter and and reflecting depreciation our income $X.X third for as in to compared investments million in items the A in $X.X we’re years’ total the of just quarter. other our with than was note as to EBITDA XXXX. totaled percentage respect our the quarter to $X.X the the be second and expense business. expense second quarter the couple statement depreciation in expect second of was making XX% XXXX Adjusted slightly higher million amortization amortization Adjusted quarter

liability in the increases provisions in noncash recorded balance the Repeat have are measured reflected the we $X.X we these First, expense increase Precision contingent to million, value of of liability an to associated to liability, The with opposite Spectrum. resulting quarterly earn-out related statement on which and income expense decreases the effect. with our an liabilities sheet having and

The book tax effective rate items. benefit U.S. for of adjustments tax included and to reform was a quarter the related Second, discrete our rate of our book XX%. tax calculation

net quarter, had income the in non-controlling attributable quarter. joint second the we income Third, to interests Repeat net reflecting million $X.X at venture Precision for our positive straight of

for it’s to year net periods, the Repeat Precision the positive income of net income important contributions. from per expect to to our We continue and the future. considering When remainder earnings contributions positive in account have and into share future these and for

Our second $X.XX second per in $X.XX, diluted the to the for of diluted quarter. a loss loss prior-year compared quarter was which share

the the now was the Turning to $X.X for and operations the quarter from in flow over year. Cash first sheet. balance second cash was six items of months $XX.X million million flow

We our as as expect particularly spring reflecting from a third increased Canadian capital, decline the in the operations second seasonal from in following impacts revenues cash to breakup. compared working flow quarter, quarter receivables

had implementation inclusive included related million new in expenditures of We and million Our between we been to debt million $XX Repeat to to center a facility. and tech the expect net million the for credit second million, investments build million capital capital over under U.S. total be of $X.X our out Precision. the drawn first have $XX.X our and of system of in XXth, which for of the expenditures consolidated and and $XX currently revolving months growth At year. related XXXX $XX our $XX the quarter capital were million, $X.X cash Calgary, Spectrum spending ERP June six

$XX up have revolving also XXth to in our availability liquidity bringing $XX.X million. total million at potential under to credit approximately We our facilities, June total

third the be to between interest million quarter. $X.X expense and net $X.X our expect million We in

expect quarters year and third be the between our for the XX%. book We quarterly effective to tax fourth the XX% remainder rates of and for

of we benefit year expect XX%. the be to tax through XXXX first now range over income effective our the months the to six XX% full book to for Given hand remarks. the modest it of tax closing Robert the I’ll rate year, for in

Robert Nipper

Ryan. you, Thank

customers up to in with operating Cardium wells open our call growing highlight profit make with laterals, to a Basin. the and we continue higher for I’d high business Before months. our These Q&A, the Deep the growing and by higher last completions areas accomplishments couple loadings. like we and during value exhibited in stage Canada, intensity progress are In few counts significant of longer

area to where that to has able casing provide eight in for I’m construction get our is ability control say today, In casing systems offering the through with operational been to Canada customer count time. call, of in utilized wells and net the had as we last casing approaching specifically cost is the to to our our systems. and that and customers U.S. continues while fracturing This bottom, buoyancy their assurance April. five reduction issues. our addition, savings XX for running fracture these market for being network growing. customers a big an in technology in operators providing highlighted driver AirLock basin In a the proud The through well growing

pinpoint team stimulation our the job needs. value terrific business the development of and the needs has those in proposition Our aligned a with of of understanding customers area done

also a challenges performance amount well drilling, interference spending related and infill including child time issues. We’re of customer understanding to well significant

understand well interference. diagnostics nature liquid tracer Our and offering positioned the is particular with better ideally help both tracers of customers to

to Our helps a potentially systems customers placement of our completion team ability Reservoir consistent frac and along provide lateral provide well changes child the designs more potential and fracturing program Strategies of the Spectrum reducing assess the frac in We well year. interference well clear first tracer acquisition multi-well is the in a from believe issues. In that of synergies diagnostics, currently a we’re this of tracing demonstration the last spacing Argentina.

quarter. Calgary service and we a full the expect testing addition, service In lab Canadian have accelerate our tracer third This end timeline by of customers. reporting full operational the – to will in for the

Over keeps particulate a the This oil but quarter Repeat produced our yet like quarter, designed diagnostics our the and tracer water successfully of our soluble impressive forefront formation old tracers, we performance is innovation course embedded in at commercialized a tracer tracers, long-term of the that and second line much of soluble the offering water. another of industry. another Precision growth. had for

We frac psi for market the XXK use addressable product. qualified our PurpleSeal in the for expanding have plug now all-composite environments,

a health-safety We had a and very frac the pair manufacturing attractive in begun our production operational composite with also factory-assembled the frac disposable point with have support provides of of the Express plugs with our setting kit strong additional advantage together We tool, environmental have commissioning which product. and combination interest customers capacity, which we and price setting that adaptor plugs the will in offering. significant PurpleSeal our tool the a and at believe

mentioned in for as agreement purchase detail front, international expected our Work individual and and night, five-year under in Aker several into in XXXX be support with the frame orders with the purchase issued more earnings to issued agreement Sea. the entered I press for North is for are BP that release orders last subject to services stimulation NCS On XXXX. a wells we’ve completed in

BP of forward our for we great commercializing taken their and our applications with Aker as us the offshore continue to We’re important been the on partner and opportunity systems efforts. excited building support well completions to BP step we for to Aker fracturing to look a have has relationship. have work

technology of Finally, to we Strategies brief or or pinpoint the and customers. related and breadth I’ll services products Well casing the with completions hangers, plus refracturing. Spectrum-tracer liner fracturing diagnostics couple capabilities fracturing service system, recently comprised a of core for the unveiled of reservoir and toe of leverage Reservoir includes the AirLock clarify brand intended engineering, comments. a our product our Multistage strength close our engineering. the systems additional sleeves Fracturing in new of branding products. activities construction geoscience and encompasses is buoyancy includes to services group Tracer initiative NCS for capabilities and just our

First, we to well adoption deliver through continue to be increased of equipment. completion positioned our organic innovative growth and systems

our accelerate to our business in new We’ve results. in U.S., Second, customers successfully base path U.S. the the customers the grown while customer have that initiatives adoption. grow to of adding a the in delivering that through to bringing strategies place number we Repeat continued are

to our rate activity. the a at sequentially business than is expect faster U.S. growth We that to continue grow completions in

the excited are Third, are in markets. international we opportunities very about we developing

offering in begun leverage Sea to that place uptick initiatives couple are our ability introduced that our we in in in Argentina of and tracer participate North to work the coming international have existing have presence in many Our the the diagnostics we expected just activity. a the

with us Finally, over optionality for model sheet capital questions. maintain provides and capital to allocate our return capital-light shareholders business to like to a of balance the up options investments it evaluate for strong operator, and And very open ability that, to we’d time. with high with to return

Operator

Our Thank first Jim Instructions] question from you. [Operator Wicklund comes Credit with Suisse.

now open. is Your line

Jim Wicklund

morning, guys. Good

that, For company achievement, a is drill on if gas an could. a I of a of Canadian does low that hell A bit little congratulations. BP pressure Aker down

$X different the the inherently Permian Cardium? what something application, what you many technology, do differently Your number you’re quarter the did are about the doing million, you obviously Sea in revenues North How just these you’ve higher and in or anything Sea in versus doing over significantly were gained wells internationally for there inside QX. North wells, the is doing the is you’re

Robert Nipper

Yes.

way Sea the about it’s we Jim, think is the and the – U.S. the similar think very unconventionals we to So opportunity, very, North in

there been that there, same decades industry, just an but we trapped it we’ve there thing but access as an last about been in successful The hydrocarbons we’ve those those the the been see access known were that’s And So to and North the in as been to just known hasn’t reserves. being economically and able industry, for it XX years that it’s we’ve Sea. hydrocarbons reserves. have economical that

BP ago, Sea. Aker North the years done project what we three sleeve a over is, work we’ve technology our variant So to in with this started just of developing

not the or but what such in are to Now economically unconventionals structure the that am as Sea suggesting North similar I’m is techniques, same the they weren’t able formations those completion with that in U.S., that develop the suggesting the cost I conventional the was resources.

the wells done, we’ve which calls. terms in of that So one talked conference of done number in about we well, previous we’ve

Before well BP already completed, in was for that a longer-term completely with we negotiations contract. Aker were

been to BP techniques. give them they we’ve of Aker complete do offer the completion time is can their allows with their for in to using what that And wells our fraction a – so technology complete traditional able that them to offer them

I the savings it’s in would savings cost might range be seeing cost of are mean, Permian in from cost the this. So that big significant. the they’re a wells of what couple the

early in XXXX the orders three started expect and will Those receiving next Waha early be have year of purchase now, field rigs or to we up by running they So purchase to the end one year. in already rig late for XXXX. There’s the be orders. work

understanding early terms with is no still is. the what is The still NCS because pretty of – can we this process it. do started late understand there to else in awarding technology, June, to it’s this this scope of So early work with in full customer on trying May, what only

full what of sure guys not more. but as try to we’re you updated keep we’ll yet, the is we learn So scope

Jim Wicklund

UK Having either side, rocks same complicated, the worked both are in on and know the rocks operations the novel aren’t around basin of Norway and in but the that that’s I Sea, North world. the Norway particularly the obviously

opportunities? BP in for should be even Aker couldn’t the Sea, to able you’re or be expand other to doing your So offshore reasonably what that expected – in international onshore North

Robert Nipper

Yes, believe it can. we

technology, a Denmark on type had different in Norway, In a – but the utilizing address where fact, they we our on on variant the a for are technology, job field. that that so today, it’s of customer of not around another to North different but you the if we the on cost side, part the will specific Sea, of issues

book could excited in there and about view this we’re it potential as particularly XXXX impactful being there don’t opportunity. pretty XXXX we So for We view sure. be at but beyond,

Jim Wicklund

you is is quickly U.S., beyond a right. fabulous, next the follow-up, others Repeat I you Tracer and I horizon is investment We’re are in do into company, there another over flow your in one guys if has still do low, stool what to one focused because I mean, very premature, the you obviously My – to, Precision, cash years? your day the leg that small [indiscernible] XXXX you’re the free on like, still putting and growing is could, CapEx aspire Spectrum so significant the next you’re capital couple of day been when

Robert Nipper

Yes.

our – trying around strategy customers products the talked on opportunities became the in we’ve of more throughout help that more – focused have and around same different we to customers strategy and value understanding or to our better XXXX The proposition. a down make trying to U.S. our everywhere the efficient rocks, become about to before – in services either – was better sell focusing get not wells. on started selling that So

better because So as forward. into that to tracers we how strategy we us diagnostics wells performing are move optimize the us, it fit that a as understand forward was right going that tool allows for

grew. Our Reservoir Strategies

significantly grew on sciences last over expertise. We have year with capabilities focus geotechnical the a the that enhanced and

with our is becoming we’re the and reasons we’re we’re one revenues keenly very customers understand closely customers their relationship and trusted that because advisor the and that’s now for of seeing their challenge with the them. we’re where focused understand we’re U.S. specifically, in getting so these to our increase working really And rock rate adoption our increase

company get about technical just lines. out organic as different for really that lots we more we’re on how there’s think help this you do are will at M&A, to an things we different through a are runway margin, if for that the us what’s opportunities we business expertise in now, about completions, we lot product So understand potentially of things Those types significant can very looking more the grow us evaluating a that intensive, there’s growth there, have next, very are that similar outside we’re the of that opportunity model focused look and for of higher to that not capital for we have opportunities today.

Jim Wicklund

All right.

So thank you luck. very Good much.

Operator

Thank you.

Our question Holt. Pickering, Byron next Pope with comes from Tudor,

is line Your open. now

Byron Pope

guys. morning, Good

I customer update the will color be pinpoint could Is sleeve to Or nicely. that? adoption toward the customer the provide just there any could on, point? update in was if you quite in skewed by count helpful? Just Permian and ballpark So you wondering at us this continues grow more it basin. terms, it broad-based is

Robert Nipper

Yes.

our Permian that, So Permian Rockies the XX% I penetration look out the of dropped about more in reduction is to the XXXX, business further Permian in it’s Marcellus revenue the if XXXX, today, to revenue northeast. more our into result a so coming other Permian. And of And at and and had midcon, as the in been based Plays Basin, if go in third we back XX% and then that, of able to not penetration about the because in we Ford, actually what quarter it’s our in business, the the of in was about would about the northeast basins, coming is is outside stacked of the Byron, get Basin. of Permian Eagle the the down and say into our the as such we XX% revenue that

Permian. but of have still outside on these to customers areas get other in our the wells, other in to focus more target efficient on the find we Permian, XX% their range opportunities able help and to the we’re as we exposure So

Byron Pope

terms to fairly just quick regard revenues then that QX That’s be that like that case helpful. to And frac additional Is growth guidance of it it question. is the nicely should again think – was the in way QX QX for With a about the reasonable up between to sleeves, a QX AirLock seems seemed U.S.? that fair and the products again U.S., product plug. like sales, driven broad-based and growth think in in

Robert Nipper

Yes, way think about exactly to That’s the it it. is.

Byron Pope

Okay. appreciate Thanks, guys. I it.

Operator

Thank you.

Ian with question comes from next Macpherson Our Simmons.

line now is Your open.

Ian Macpherson

Hi, be morning, Is this second gross XXs. out from stood thanks. you low above low line? improvement that structural historically going Or more towards a the margin Good something back mid-XXs there low update to guys. could to reasonably can The expected? relevant the expecting and an XX% you’re us down quarter add if give are us there, you to in that – XXs

Ryan Hummer

Yes, Ian.

unsatisfying Canada which breakup, the of the Oil an what saw quarter which quarter in from Plays being XXXX in quarter of we’ve do ways, So mix, margin about in historically most Shale some historical revenue margin standpoint the from lower gross the to of look, answer. lot part second we’re you is, we very the has and pickup of sort with and the from we second with happy a talked guess say the in had competition. I competitive But that and with I’d in what we’re in second operate, Canada know able areas I to as a levels customers both achieve product in is

margins. the you quarter, up product a project bring in and helped So higher – revenue had the which to of international U.S. mix

average say of a full the for year, second to the be quarter expect may would we’d the year. for the second So little we looking forward half what that the bit above

as So the low we this at point in forward appropriate something probably third more quarters. still and the towards is fourth XXs look

Ian Macpherson

Thanks. good. Okay,

the is Permian given the to cited With weaker would Canada factors for Canadian And and growth. would to then revenue revision of that and this Canadian break revenue the full revision, to revision all is your correct also smaller most it explain of Is guidance, it year most, me well and flattening it that dollar U.S. magnitude Canada your interpret the related? also up maybe strike a of year you even guidance close of that. part

Robert Nipper

Canada could think – anticipating not We that conversations but their think that what some it a that any guided believe that we our slowdowns have FX and potential plans potential or we customers with in customers there if way about mentioned be it that include in The and we’re are rate. primarily they slowdowns impact having we it’s the up far, earlier, slowdown I possibility there’s think is would Permian, is there there for direct as activity our so but the where did is break in we happen.

Ian Macpherson

Okay, Thanks Thanks Robert. got it. guys.

Operator

Citigroup. comes with question Scott next Our from Gruber

Your line now open. is

Scott Gruber

Good morning. services to your the in penetration effort opening of new can your you lab? could market your market Robert, how Canadian with us the of that greater and diagnostic drive on update accelerate tracer

Robert Nipper

Sure.

resources Canada. So step sales to the was add first some in

the So that back and second one put we’ve we’re and of the in. conjunction the that – the that And in lab local doing of is been been had the process coming of in That’s issues doing the in. analyzing samples not has in of salesforce a delaying a conjunction Canada bolstering that. with Canadian to lab having a it

I earlier. So that’s almost as complete, said

in big because that into for is the that open and of integrating business then quarter going Spectrum sales that be force that We a be expect And the this third is later seeing U.S. benefit to we’re also say the thing will I’d there. benefit the from opened NCS

fully expected an group than actually we’ve now were in the seeing the seeing that U.S. seen are as with Just one to who NCS common only sales and for that. sales see are we customers and sleeves into using earlier the not leadership from that we’re adopting integrated tracers, running the we’re now, where but impact customers the teams example, U.S. as tracer

that move taking So and the into same plan. strategy Canada is it

Scott Gruber

XXXX? versus And in customers business, for tracer Canadian then you dimension even growth could the maybe Is revenue if is a as in double-digit versus us, issue you this as range, do XXXX you this pretty the U.S.? the for you potential the easy interference help broad grower business see address a with grow XXXX, in how for XXXX well entire you

Robert Nipper

or whole? a In in – Canada as

Scott Gruber

total? In total, in

Robert Nipper

don’t market percentage Yes, as – the significant, further fairly expect start more I we there significant just mean, that’s infill big gains as XXXX gain we tracers adoption slowing forward more and have going opportunity to customers growth share opportunity here market down by because XXXX the still into they in we we a that a have issues. we – share because see using and but drilling with and had not do help

that don’t what say to that the expect we’re for I that can is seeing growth drop. XXXX, I So

Ryan Hummer

that there just infill a I just to on jobs talked in – think, using beyond that, working in of other in that you’re using There’s that some couple initial tracers between We’ve Canada. right we’re to legs application. just Scott, Argentina. further about grow room tracers

that a those building we’re in our at And standpoint other this take looking that geographies up tracers Robert then a which opportunities tracer mentioned to group presence into introduced year, of we We’re tracers in those well. typically water in tracer from where water diagnostics sort have as differentiated liquid are earlier technology long-term from soluble that’s and a really any assessing and form today, those don’t used of which results portfolio studies. just are used full flowback for show and a to

water nicely on understand and water the our soluble multi-cycle basis the a with value sleeves. long-term together proposition production customers stage-by-stage water tracers ties So and cut of where deployed

of well grow completion to group there a opportunities lot just beyond of diagnostics So the are for sort count going tracer U.S. we straight forward. a think

Scott Gruber

least line, my last outlook the me, growth remarks. One what XQ? breakup for there was prepared on a on one international is interesting. during at the revenue Very from line, again

Ryan Hummer

we quarter, $X $X range to third million the to of For million. guided a

Scott Gruber

Thank Got you. it.

Operator

you. Thank

Our with James. next Marshall Raymond Adkins comes question from

Your line now open. is

Marshall Adkins

gentlemen. morning, Good

you’re as in it same uptick, give uptick like really on the next on had mentioned, sounds the next some is substantial growth stuff, Argentina big a in thing, international not obviously Jim but why the that’s that that stuff; So expecting the international? color quarter staying that Aker us confidence was

Robert Nipper

Yes.

Argentina, So sleeves not both tracers. it includes and for work Aker. for there’s It Sea also that’s also but Aker includes North BP,

project our contract mentioned to and Argentina and project a I As multi-well in we we’re it’s about awarded that earlier, we with be a believe on now. are first tracers second

The about that’s week job also through England. so come We’re a and just start in imminent. approvals frac to this have

internally what from four. projects activity bit in there benefit was lower a in quite there which was and mentioned expect so delays – delay to see and we for then our the a forecasted had is I we revenues than there three So of and that caused to be those

Marshall Adkins

some behind – this Okay. came thinking and progressing the you Helpful. Then them line quarter, on kind what that color with what from been contribution curious from of last I’m of gave us those last you coming progressing thoughts how your you back bought the is. when or potential ahead us this that’s much give give just to were in Repeat actuals good how and quarter? on how has – on Spectrum, as us a longer-term to view and

Robert Nipper

I’ll sizable – how is performing but pull more actually. they’re we’re expected performing for we Ryan earn and amount something by out, what thought it what so Spectrum – – little the can outperforming so, actually a thinking accrual about bit outperforming and speak they’re specific increasing relative amount by you to a we talked case. how about to reasonable the for base then We’ve

So the and very they’re but to only that not continuing the new products. Spectrum, some we’re innovate from we’re pleased very, seeing way growth, with what add revenue with

our very We the have performing we very, we’ll expect is Precision, we product two out that coming we quarters line. new had Spectrum. expectations over announcing technologies When next that that of about expectations, for but to it Repeat high think be

we in XXXX. composite high-quality Repeat Repeat decided – manufacturing a low-cost, Precision established recall, use you product the Manufacturing was force. Canada force Precision originally and shallow plug leaves If to a develop that secure early to product in inside in basins we

and it developing it what of XXXX quarter only needed commercially so, first first of all the do had full and of we launch spent year; was quarter we we this that in trialing to So we first had. our it doing the the product

expected. then the, just just composite location. charge the put quarter, about when a the So we’re rate in perforating a power a the customer delivering thrown company selling perforated plug on the stage comes screw addition is and really is a and wireline it’s excited set that’s already wireline and and or one out the tool head assembled on when growing that’s there firing drop not that at plug guns which everything another of a PurpleSeal gets that a Express, wireline left what what on But whole, is it’s the that’s we every installed about is away composite with the on, out to setting is growing the location what plug but we’re just the calling

So interest been the customers see demand from out we that has the there and stunning.

so the – or this to So in we today. we’re in can product the in product capacity marketplace going as place of that into start manufacturing line introducing that that get right fast we as can middle the

Ryan Hummer

sand from in the in in by business service as impacted diagnostics was – and the on Sorry, Spectrum access of of just tracer greater had the some saw quarter. completions in the with mentioned kind then bit first side, Spectrum call, and side, to the growth in bottlenecks respect even a we product looking last to the first quarter’s the the to second just the revenue earnings contribution relative quarter, the in U.S. from you quarter the

the at through time, in non-controlling then you back the overall So Repeat health that by of that as a that’s was has sequential interests U.S. that how business. services through line line the track kind think to financials, and growth second you Repeat And primarily how Spectrum look because in Precision to driven of about around quarter. the take the view growing I’d over the and that

Marshall Adkins

going you. helpful on That’s you. Thank Perfect. lot of Thank guys. and stuff

Operator

Sean question Meakim JPMorgan. with next from Our comes

line is now open. Your

Sean Meakim

maybe and are that. Thanks, about versus across geographies? incremental to mix how margins thinking be services impact great a you your and hear your see good the we would morning. on in thoughts just about seeing talk updated products shifts bit as Could portfolio you little going It forward,

Ryan Hummer

Yes.

I where with second as some the in as on on versus products – from taking products quarter, probably side a I’d incrementals we folks. international We’ve is, to above respect just a the got probably margin opportunities from stronger think If a there. that to in on focus think as Canada we’re relatively moving to we’ll breakups say might products saw the a the the second what I’d third period activity quarter full say – say little what service looking at impacting of the we we’re in to within services the little business; a the quarter about be Canada you’ll bit quarter, from us for second the we be what bit good front result. is narrow of get third forward lighter quarter, our pretty incrementals move spring see in

North American the lot we lot solely serving with not currently Sea, in you’ll waiting service. waiting folks unconventional international do We’re mobilize are also also of have our seas. a is just activity with North about U.S. as time a it the group out supply some if that. dedicated equipment high breakdown on a of chain And logistics have efficient even of you for or think times to activity internationally, as time is There and but group that the the that on you’ll U.S. out services to helps international, are people

standby us call it, few days on days. are full for versus low-margin So more, there’s a days revenue which

puts some give So the does of takes bit of that as a as translate? a activity and how little far picture on can

Sean Meakim

Yes, I that’s helpful. think

outlook just had topic could talk other – with get and hoping how different half? – you see an some types traction how or The applications, shallower that’s to was how on, U.S., just the update in the the going applications you you’ve Permian some that over some maybe say, about good you in and I of second within about the of so thinking last quarter the characterize

Ryan Hummer

got execution we’re going or laterals place, way on like in certain depths as not Yes, of pleased or earlier, we’ve applications, targeting I wells it’s of lengths is the and the that. really with targeting said strategy that the things Sean, it’s

the frac cause uncontrolled if are we of to of water have today required that where big is an and focuses to the maybe – close where for one well could to that frac the applications typically think change. that the we that applications reservoirs intensity is geological that it, breakthrough were to it So about economics controlled and the have low barriers the

in Permian the of we’ve is and where we outside in other the U.S., the So around second Permian, and areas of first have was one those identified that number areas targeted. a we’ve one the the then

those we’re the with so another now. today on the that And strategy Also well parent-child infill the issues issues. areas penetrating we’re executing that identified the we’ve are is actually application that

the in So we’re project actually of now operators working on with stack. a number a

we’ve one seen or we earnings user-controlled – well do there we those this spacing those that generally on the doing system mean, closely NCS need to the we applications the work engaged with we’re the comment to have and with working around our them, we’re the their the was deeper in wells made but that that fracture affect these in we by group frac of working have where can I are understand relationships release ones issues and change working So very parent-child standpoint, so guys not just just customers, the from earlier a all are it intensity we’re Permian, with not week also customer of than Strategies fact, but in there. and try we’re some that Reservoir to

applications So that about. strategy, as will that we to continue were of the talking some execute that I see you beyond grow

Sean Meakim

Very you. helpful. Thank

Operator

Thank you.

next Fargo. from Jed comes with Wells question Bailey Our

now is open. line Your

Jed Bailey

you. Thank Good morning.

next, sounds be today? other internationally maybe on markets or to gave good of opportunities little know, that a months testing what the of don’t other evaluating over lot you about doing you that be North kind XX see or may you kind in in of may six bit a in and testing Sea. it as you’re I You guys talk Argentina, you like color the Could markets

Robert Nipper

Yes.

China North Sea. we’re Argentina, areas that other working us other opportunities the as today the in focus There’s So But primarily that pursuing. is and there well. is we’re for

existing have say when presented work. and has longer-term it’s and now opportunity recently I – Mideast that’s shorter focus versus But we However opportunity. and itself focus the on right that an ongoing a business in

kick So than we in, focused when don’t clear highly longer-term. will that’s view are a that but we think near-term on, have that one on a it’s

Jed Bailey

more with pinpoint feedback customer appreciate can All as with Or that. U.S. and your I right. you stimulation progress And talk in of next you’re system then generation my kind at? your of you more of kind about there? the you is, of customers Okay. broadens, and get follow-up the or modifications the changes kind and that looking system pinpoint base then work your

Robert Nipper

Yes.

to doesn’t coiled So accessing of we’ve where generation this And alternative by pinpoint year. think we tubing in is an also the require application the an looking sleeve we is coiled of we’re the think But laterals that of an customer. system has that it bit the coiled aversion are some the next the couple It’s something applications to But for issue toe industry. that times there toe well. frac. at that also of can longer existing of open the a tubing to where the there a potential about system could is tubing talked sleeves place obviously be to the the a be well full for

as that XXXX. to project And we make we is the I one customers, very, things those as in focused we on. mean, but want a So are have forward to having that customers have do, we’re with clear hoping know more rocks the very still that commercialized something working of they is we that that in understanding time the fairly some because better than moving mode we’ve of we in rocks work where some extent to we’re and those been on get mature of to to in Permian to for factory understanding the are as period the areas clear some very be you. is be trial very, can, to break to And we and going is to technology required the for we difficult. can say, here’s go what customers able to what’s do think in sure of

an more makes far we’ve with how help, and other or is learned the an will to things gotten have challenging be be been better to get able the that we a that the area individual into more learned than that in seen the the using of that’s just and can about achieve. production And techniques how the the be the way and more areas that cost economical efficient area production been I of types different. we’ve And from specifically the to, are affect into as that where predictions that we’ve able formations. efficiency will telling particular the more stimulation pinpoint think different some example, so go able we to of that that to we what the how our efficiency to wells a extent standpoint, and we go these the results us is because we more plug-and-perf. us other models then customers efficiency we’ve give Permian mean, information around outside able now it Here’s we’ve

less any using without just the pinpoint they have they from gains being they So the of from were get cost efficiency that than efficiency with plug-and-perf.

we’ll we more So see as of that more. learn

Jed Bailey

appreciate update. I the Thanks. I’ll back. right. All it Okay. turn

Operator

Instructions] Thank Ian you. question next comes Simmons. Our with from [Operator Macpherson

Ian Macpherson

also the intervention, I’m follow-up so on good. Thanks. My was

Operator

any I’m Nipper like Thank to for back time. you. showing to Robert over at not now any turn this the closing remarks. I’d call further questions

Robert Nipper

cover who behalf us analysts thank joined on including entire our we’d On who everyone today, of to management team research our like call the of you. the all Thank NCS. board, and shareholders,

I’ll supported allow Multistage. effort employee the said on it, next the of Thank we’re personal in to exceptional interest give daily our who on from I note you, look talking innovation to again all the committed before and that have it in beginning. and certainly culture believe us We thanks I’d operator. forward development achieve results. team NCS we’ll employees we in keep a a Finally, to our an us of to like saying industry best put preserving everyone’s to call. truly basis of and has quarterly the amazing And and I’ve appreciate

Operator

for all you does gentlemen, in today’s conclude may today’s disconnect. participating thank Everyone and This Ladies day. conference. great you have And program. a

NCS Multistage (NCSM) 12 Aug 182018 Q2 Earnings call transcript