NCSM - Earnings call transcript Q3 2021 | NCS Multistage Holdings, Inc.

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Operator

00:05 Good day and thank you for standing by. Welcome to the Q3 Twenty Twenty One NCS Multistage Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions]. 00:37 I would now like to hand the conference over to your speaker today, Ryan Hummer. you. Thank ahead. go Please

Ryan Hummer

Thank Multistage and One Third right. joining Conference you the NCS Quarter you, All thank Gail for Call. XX:XX Twenty Twenty

that which us believe periods costs these company. We you financial today's last cash non-GAAP on with because SEC and refer economy, and they Robert are we other like we this made comments better also with our current relying federal historical the remarks over In performance. expectations measures pandemic today information, known that those with our demand and that that than risks uncertainties, like associated and forward-looking issued some call operations reflects EBITDA, adjusted include to note protections. will and release to operating Harbor statements may led in for allow capital, business extent be listeners and our measures. we manner Our would without today and working COVID-XX Such to made forward-looking including to the flow press net regarding a consistently are on the performance nature outline on be to XX:XX caution are and to our our I could please compare Safe use refer the risks. oil night, various future subject contain the and unknown comments. the provide public our CEO, will financial filings impact XX:XX regards structure I statements of We to call call, information other results would that by our global Nipper, of free along capital to in

the call to available press our to ncsmultistage.com, release Robert. turn non-GAAP the measure. will website, reconciliations on both yesterday, investor are over financial and of measures comparable XX:XX posted I most GAAP now these Our provide presentation which financial updated the

Robert Nipper

conference XX:XX Thank our our call. quarter to and you, one twenty employees investors, Ryan. analysts And welcome joining earnings third twenty

third with third precision million third the the guidance we generally the product earnings of in of aligned in also the increased in Our have and early more quarter drilling line, levels activity at US, of of revenue region. and briefly is partially and maintained our range for offset well fell outlook between by sales appears in markets. variations our be improving a provided XX:XX we twenty slightly have each Canada Diagnostics performance August international eight noted was and and on correlation the by activity prices well consolidate short fracturing latter and the I'll job our our consistent as our part results Our fourth improved US, quarter XX:XX Product holding discuss one business, provided construction the That call volumes which quarter tracer so higher early product construction some in Historically, XX:XX tracer to completion on systems sequentially. dollars our were with guidance far be a performance the last that Starting with than in with the lagged reduced basis. within twenty level and those correlation quarter. lines. with of oil

quarter in drilled, The Byoynacy AirLock normal of expect in line holiday fourth XX:XX effective extension Buoyancy the which cost declines modest while solutions. couple have Canadian completed in in quarter, US as Canadian the inventory options of drilled casing our reliability as of million third as forty growth within the year. quarter we've but eleven hundred that the one point currently sequential percent two expect wells represents dollars of wells. uncompleted Canada one the levels well one and revenue dollars land range one compared guidance retaining weeks outperforming substantially We the for construction has We business nineteen our benefited activity was from of outpace in dollars Canada five in sequential in second point their in to as growth above sequential in customers the than hundred within far Our last five count twenty two track the future comparable continues history thus twenty with established additional one of with million the point product deliver quarter revenue to assumes XX:XX US. wells the providing innovator stronger reduced industry increases at activity of twenty increases to Canadian to a and recovery US twenty customers unmatched twenty the twenty growth also related in to in portfolio case of field our the the or and million a of rig percent.

in leverage systems to to our other continue lines. Canada opportunities fracturing presence and through strong our product We pull

ship profit clean the We operations, coiled frac expect formation close completions hundred flow post to With was over provides for there XX:XX completions maximize sand of during quarter We XX:XX each fracture our helps complex Both guided well frac to crew twenty was network. one five of and point exciting submitted a using was dollars sleeves Canada. recently with while using tool in allowing frac a continuous generating also a which sliding three dollars shifted one worked year. now efficiency one frac and There's on-site back point million the I'd billion operations. levels cost. to two units zipper better dollars. to to additional for near maintain two operations, XX:XX our range to revenue completed a international able was run frac the multicycle out highlight flexibility two the Turning the customer activity tubing operation during of operational remainder million Coal sliding our pumping the complete minimizing process track operations single had customer third wells in Canadian sleeves, point in one accomplishment five zipper industry continue and in our to within nineteen like to

quarter countries have as two Our the XX:XX operations in and we or the fourth momentum Argentina trials activity North and the and ongoing as September. we the product resuming progress crews steady ongoing Middle and Sea work in North in through multiple continued in China sales in Sea, have in working in Argentina quarter East. has operations That accelerated with in first the

percent restrictions. increased third revenue COVID in navigating able forty remain managing team of range quarter deliver to twenty is quarter Our and maintained very to for our forty on twenty-one, great five guided capital of in With and difficulties the have the staffing twenty we percent markets gross gross focused related on margin several highest and nineteen. XX:XX of quarter doing the the fourth the six travel is exceeded which in our the international job We projects spending. percentage forty of due percent discipline since a and costs were margin SG&A to

the for second than as third at of balance highlighting of million We hundred and were the of twenty of for the the as a nine dollars dollars two of net both twenty the seven increase was twelve strong less the borrowing as Our quarter and million And decreased end nature percent thirty year, capital capital quarter thousand dollars. twenty discipline. business our twenty quarter of the The with approximately one. September nearly XX:XX first one. one twenty from million twenty maintained our by cash net expenditures ten our one. thousand total revolver and one to twenty twenty totaled wide financial a for fourteen months twenty Our thirty dollars decreased of of September twenty percent quarter sheet hundred and compared of the third June compared to SG&A for dollars the base

impacts experience cost and to purchases lead for party inflation and well in as charges. increases and chain We supply higher continue extended service stresses, employee times fuel still of early as costs third wages fiberglass the

increases largest will to us better price these continue increases. input In we strategically secure evaluate implemented future with that selectively price plan customers, XX:XX have and surcharges allow mitigate rise. will addition, increases to working cost are costs to in purchases our continue volumes as We to

increase of twenty quarter on litigation to is spend related quarter first matters IP fourth the of the to in expected Our two. one and twenty twenty

through exciting we As the and temperature our US to for through wellbore litigation dates products developments load related We've which performed to testing market. with related were tied Canada. some AirLock used when high and under XX:XX to approach in in our North system with the run be gas to like rate trial testing our the serving sleeves the offshore regarding V-Zero share into qualified casing sleeves to the systems rating, qualified means Finally, Sea I'd fracturing in cycles. tax buoyancy

will customer a to the Taking and even customer relationship our time with to discuss to and run-in company us We expect time. grow North completion to offshore the further, rated XX:XX that sleeves the help be recently international our over develop old base we've and with this Sea markets other an contracted quality in the and clearly results XX:XX in deep-water system this I'll demonstrates product ask detail. develop financial line. in system subsea process now fracturing application to systems, product leadership where lines more our systems, early Ryan the take will V-Zero

Ryan Hummer

Robert. you, XX:XX Thank

two yesterday's than decrease point markets. in million in profit point amortization increases, the a by quarter increase higher million less basis, our in one and third of percent reported release, for Gross expense revenue which third Canada, prior offset thirty of percent four quarter was the during total percent dollars with twenty sales or activity percent revenue sequential quarter was ninety third depreciation forty seasonal and the higher revenue was percent fourteen fifty percent in as revenue. the total one an revenues eight of excluding thirteen were cost US forty five hundred the of than in six year's international and a quarter, second As defined by XX:XX quarter. On nine earnings dollars third supported

or quarter. twenty credit of net approximately retention percent of in associated million prior point Gross XX:XX in profit point related revenue employee As the one million bonus benefits, third eight year's compared dollars of to twenty third quarter zero for dollars accruals. six included seven the thirty one

five twenty our was thirty reductions eighteen months. last operational million to the during Our the SG&A XX:XX one second third course gross year. quarter gross million or one quarter third in point revenues that profit is business the nineteen. as of the percent were For twenty five of of from comparison, twenty the compared demonstrates six of margin we've the made twelve was This increased since twenty quarter of point a dollars in seven which dollars million one. XX:XX forty quarterly fourth twenty point the gross margin as leverage quarter highest third in of our eleven revenue dollars to percent sequential part dollars lower five five structural due last during over the Our quarter, the cost costs million percentage

lower second SG&A dollars twenty third litigation Adjusted based the in and costs. second twenty you compensation the point point point three depreciation to XX:XX million of one increase point six two dollars the certain reported EBITDA XX:XX expense Our employee million point one eight one non-recurring quarter attributable zero precision one five million which zero to in twenty million the as one. was all dollars net a for the the for Turning of In retention sheet. share expenses twenty noncontrolling totaled dollars share quarter approximately and balance prior was non-cash our SG&A income XX:XX the two dollars was includes point sequentially million million dollars quarter loss million cash eight was dollars XX:XX third compared quarter. flow compensation point litigation non-recurring nine of million million as included expense dollars that the for one to third to year's expense was compared amortization quarter, the an improvement third dollars including based compared four remind four quarter interest point and dollars Our third zero I to the in to also one million credit SG&A point and our and quarter. items the totaled quarter benefits. now third of was Net repeat two Our in quarter expenses

for flow six from five flow were free cash quarter million Our operations cash dollars. each and the third point

in total thirty, had of the one one, obligations. free million flow cash seven we the point On nine borrowing entirely Our base debt dollars months eighteen for thirteen four which twenty twenty twenty point credit million cash facility first dollars. million eight and of September of point thirty our two is four September lease twenty was under was dollars point dollars. million comprised On capital six

point million total dollars revenue Within between twenty be five US in access of this, Finally million expect thirty forty In five our from dollars addition, fourth four eight million which few in between five six point thirty as our fourth point revenue repeat million million twenty precision dollars quarter thirty We be had revenue to borrowing nine million be point revolver. working currently capital quarter. million the points has for and to capacity, one dollars is three dollars. dollars. dollars the eight to XX:XX September our five over we on We net guidance well. currently point Canadian twenty seven of separate to to our expect one and twenty and

be We also dollars international dollars, driven higher quarter which of activity primarily four and fourth reflecting quarter in XX:XX an our the million revenue percent gross modest activity regions. by North including and margin additional the between expect three quarterly forty million see. We five from increase in international to expect during forty revenue, percent the third is six the the increase to

items SG&A in in dollars our and the to million dollars and share dollars point comp approximately compensation litigation non-recurring three in million reported one includes expenses. based quarter. between approximately million This expect million inclusive twelve We share and one fourth based non-cash of thirteen dollars be

an expect agreement tracer other primarily activity income services a in in fourth the technical and Diagnostics Oman. support related quarter agreement increase We for to in

the quarter approximately fourth the depreciation proposed thirtieth the terminate guidance excludes a September qualify in of if potential and facility dollars quarter, expect We in benefit expect the one fees for unused bill our that over XX:XX amortization as fourth million we be While the and we quarter for would expense the interest be in Employee ERC remarks. fourth of update issuance net million to expense to any twenty related hand now debt our to Credit to benefit costs. Retention twenty full I'll past. infrastructure and our reflecting provisions it two as closing this our Robert XX:XX dollars to point one zero point year and three primarily amortization guidance

Robert Nipper

and throughout operations the full October does with international remain anticipate cash especially typical from fourth this is that in last dollars for dollars with positive two for the benefit our twenty year-to-date full we in for quarter Canada North dollars US we you, and as This activity credit mentioned, guidance will year. East our one. active quarter Argentina guidance expect in XX:XX expect weeks and increases guidance, XX:XX twenty consistent updated twenty we levels on million the in full holiday calculations of well. twenty markets results or in in expect as third be Ryan. release. and in free one in of to include million the the which characterize one November million the offset will We activity earnings dollars Our be the Based we activity that consistent ten Within expected EBITDA not Thank our fourth that in range non-recurring. employee hundred dollars eight flow with year our net any the expenditures million slowdown XX:XX our one in the and capital of is retention levels twenty quarter, less, adjusted and fifteen Middle year and we one follows. the quarter currently gross the twenty Sea hundred activity and by the increased million one fourth eighteen to Ryan We year revenue and

with and expected product International multiple activity and our is continues up open close I'll our US the NCS multiple and tremendous for activity increase the NCS to reportable the in than are by nineteen to XX:XX Our we growth far twenty no job a higher we positioned twenty couple operationally construction where in has brief geographies in sequential at expected precision. quarter momentum to recordable the strong record complemented to with continued continues of twenty lines. to US Before Q&A, comments. into industry We team in one do a twenty thus faster incidents of twenty incidents with and Canadian in operations return levels. call year. repeat this improvement across I'm We proud Diagnostics maintain the lines well have track well product market say recovered fourth a from to XX:XX recent and position our with Tracer that track zero

We our in intellectual We there to recovery I'm continue managing of technology a a our new and our possibility to and in protect OPEC innovations invest to the and cyclical industry old XX:XX supply. is services and bring secure for plus believe demand and success multiyear customers products the enhance current by recovery. property. global encouraged

have any to working growth. of associated capital sheet, each with markets, capital And our strategic balance support and providing questions. leverage in strong and We assets borrowing for future with grow requirements place infrastructure earnings NCS organic position and to base business support our in growth that, networking our revenue we'll the welcome our in

Operator

John XX:XX Instructions] [Operator from comes the Daniel. first question Your line of

Your open. line is

John Daniel

just orders walk once do start tutorial what's prove to we time question When process? and product? on starting Middle to me thank quick you about in like XX:XX I Hey for trials that you, us a the just our you one in filter, comment morning the a see for Can Q&A. guys. you the East. Good field have expect made you just would through countries two

Robert Nipper

it a on that's Middle where really is. great one Yes, East, the question. XX:XX depends In

Aramco, with example, took us probably point to it called able five what's Saudi an two to from start years get to finish as So, be catalogue.

start that we going there countries that product process. process. But and particular a to in could selling catalos fill the Each with through that Aramco other Saudi world around the that's them. So, accepted long some Middle our not trial require actually products of where does are we we get East elsewhere that the

starting as be a within conservatively move – next trials the have we be to revenue. twelve into immediately trials a from the generating should see on So the So, revenue you the and field could next with field that field have, timing we mix of XX:XX within bit result months. these trials

John Daniel

Okay, much. XX:XX great. you very Thank

Operator

line XX:XX the Your open. comes Your is next from question of [Indiscernible] line

Unidentified Analyst

XX:XX for comments. Aditya those [Indiscernible] Hi is from morning. thanks This Good

So, I was I just some your quarter, profile good wanted give just could you to by wondering I some, and geography. if a had on color you on revenue

projects around achieved just four revenue question follow-up sustainable? Canada, also to you one-time wondering so got in well. because seller would know same or have would look? these expanded some you obviously, maybe the the I gush next this because put you're QX, I period a if quarters, revenue are then on levels bounce or the a could expecting as you've something So, you've back the was answer lines could in growth you I And you how that but US, COVID more that think do of on in

Ryan Hummer

XX:XX Yeah, sure, I'll that. Good morning. take

we think with than I US. see while what the the market has in in bounced back Canada certainly faster So,

activity with as the And other continued growth we able selling to twenty various market drilling a curve still be work expect we of this activity the through winter enhance that lines execute expect share our we Diagnostics, be twenty double seeing continue faster very customers than two to we one. as and next our through pulling within product grow course are and quarter cross of indications digit to developed, for to strategy with in sit market certainly at well two on systems, precision we from across to first where the fracturing in product that more we're Canada, the also Tracer budgets lines is is fourth would active in there our share participate some being have the in market season would point, twenty have in certainly quarter additional within compared but and the twenty in into that year for Canada what yes, think over growth we I than twenty potentially the to and strong twenty plug as repeat and market the well. construction then

Unidentified Analyst

disappointed for Thanks the And know little XX:XX are or that. but all for stabilize little when, the turn to few how US, performance? are do be I seeing? your that that you I just a was mentioned recovery see to these expecting you over wondering coming Robert concerned you things with that, then example to you are on you are what at normal the expecting quarters, and to a improving, normal you're with

Ryan Hummer

No, I'm right a continue had it repeat wouldn't the services product there would we're with fracturing last it I and that haven't that the in some We market, being that repeat we product. a the the a to the precision off and we've earlier pull at that I we say then of lot about had in on the we product grown that in performance was We to design. at while hoped of worried had year we of the issue grow things certainly precision, launch had disappointed the one the an product US but in XX:XX quarters couple – runs the found and had we that had mentioned, sales it, of other market. for we couple US

we've We the back the that those improved We we into with now have market redeveloped addressed product. learned. issues

the do to have to in again to again in the the growth we Our previous and to we in business continue out grow repeat there. success beginning quarter expect continue precision expect the US is higher rate actually market the first product that market. had sequential than And US we

Unidentified Analyst

XX:XX Okay. Thanks Ryan, that's helpful. very

Ryan Hummer

you. XX:XX Thank

Operator

no are further XX:XX this [Operator at questions There time. Instructions]

Robert Nipper

thank I of management you, employees company and the our especially we'd that behalf everyone shareholders sacrifices call analysts today like XX:XX team of including the employees. the our and board, on the and everyone that our by to service and truly operator. will research support in customers our new our Thank enable NCS other. appreciate customers effort to tallest is successful. our products continues that from of growth On have to our made to excellent each be been to and developing and excited our I'm services team more the provide return and to

We on and demanding customers. challenging results to and are taking the work technically delivery our

Our managing talking a people the the challenges many forward in that call. to we goes have tremendous always everyone's job We again with interest you, come earnings have next the in appreciate done our we on multistage, our best call. Thank continued operator. our I NCS industry. impacts COVID-XX. in believe That of and people concludes look and quarterly We team

Operator

disconnect. conference Thank concludes today's This for participating, may call. now you XX:XX you

NCS Multistage (NCSM) 2 Nov 212021 Q3 Earnings call transcript