NCSM - Earnings call transcript Q2 2022 | NCS Multistage Holdings, Inc.

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Operator

Good day, and thank you for standing by. Welcome to the Q2 2022 NCS Multistage Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. to conference like Hummer. to now would turn over the Ryan I go Please ahead.

Ryan Hummer

and joining you second you, thank Thank Christy, for conference quarter call. the XXXX Multistage NCS

our and and by Our financial COVID-XX remind cause differ of to from results expectations These as forward-looking some regarding Russia's uncertainties include operations. CEO, risk could be refer comments today economy, comments that to that by actual statements the our led Please materially statements. and company. global invasion to today's to statements any for results call factors Robert I business including will listeners many Nipper, oil latest herein, are for and forward-looking impact ongoing I'll our filing of demand want Ukraine the regarding also comments. cautions expectation pandemic future expressed on of risks our and subject the such and our SEC

cash adjusted call on also Our to of include today our free found our GAAP and the details The non-GAAP ncsmultistage.com. release, comments net financial Nipper. now measures, to reconciliations I'll included earnings Robert can most which non-GAAP including working second are website, the in underlying comparable be capital. EBITDA, flow our measures turn financial quarter CEO, and over

Robert Nipper

conference to Thanks, second quarter Ryan. investors, our analysts call. Welcome XXXX and our employees earnings joining

at of quarter of in for May. international U.S. second second largely line guidance our million $XX.X revenue each in the of and U.S., in was discuss midpoint and was $XX.X the the $XX.X Canada with briefly markets. to I'll guidance early performance our million million. the quarter the provided of Our in our the with the Starting results we outlook

fracturing and quarter the and second as by increases the and quarter for quarter XXXX of compared repeat to performance in XX%, XXXX, activity of both systems by precision. the first driven revenue over Our increased

year. gun perforating our to progress be to Fire modular for that product revenue by line new field Purple system to encouraged throughout and trial continue continue the for expect We grow

experiencing fracturing had Purple business the gun opportunities in our operating downhole quarter, technology trials the known. string We're and Mid also the which system, the power the tool, U.S. our charge perforating including initial second high setting in quality Alaska, growth benefits for the our completions, for Basin Continent, the an includes half River plug-and-perf disposable in successful systems modular well the Powder with year, During multiple composite areas where of tool of second and plug, Express are of system. we Fire integrated

activity. the customer Canadian market of million delayed the as weather $XX.X guidance $XX.X Our seasonality despite in June, million, activity related to spring $XX.X our strong, in revenue breakup million high wet and end remains to which conditions second quarter of exceeded of

perform well. Our sales and continue Canada operations to teams exceptionally in

We leveraging strength our are grow product and the to strength maintaining fracturing that our of systems line other and base lines. product are customer

all customers, recovery very turn Tracer business information is to enhanced completions their utilizing Our in performing improve well the are strategies. valuable providing Diagnostics in our insight to also and who Canada

customers could robust in be in XXXX, third is good which as activity a off to spring QX count first expected and economics discussions quarter, levels, in In of our for the Canada. product, far over wellbore addition, of breakup. composite PurpleSeal doubled to timing XXXX, current We're we've with the Activity quarter reflecting full in in as the XX% of scope more offering. opportunities peak of the already after available the that but just plugs about Canada than encouraged the the purchasing for start customers our not rig number strong providing by customers both their thus with our

million, to our however, the activity to the international expectations in $X $X.X of million of quarter relative revenue. $X.X fell of improved quarter below revenue second Our first million with

it activity increased XXXX, revenue the Although our that into we believe to quarter of the half during increase second continue the as will year. second in of international we move

customer fall from sleeves to and highlight customer more initial order our North as it the of deliver presence our of has the in of a short been all customer was super XXXX. Sea sleeves a year installed and initial a One allow end. We and year sleeves for market operations the our revenue expectations be second later expect Sea. currently international will quarter and support our in U.K. us increase the for sliding efficiently to expect better for We our in operating will we this in scale region. this base sale before Expanding major the priority these in North to to customers

continue service by and and as fiberglass charges. and costs, be wages, transportation third-party and supply We to extended cost in labor including times lead increases chain purchases for impacted fuel steel, higher increases, employee as well

price second and the expect benefits XXXX. increases with net $X early strong our actions, the from first half margins in our materialize. to and half gross increases in initiate price currently XXXX. to has pressured of approximately of during XX maintain of we we implemented the in of receive continue June an a cash gross to of cost the improve expect have surcharges as revolver incurred XXXX before our From margins which increases the million price costs sheet our We standpoint, We We increases balance undrawn pricing timing XXXX in as input rise. future benefit full as

the $X.X like million business and both of the and our expenditures Our capital been million only our discipline. following net continued financial capital for nature were the months quarter through first six $X.X have

I'm zero far XXXX, to team Our a job year-to-date that have proud thus done in has in NCS tremendous and XXXX. entire incidents had XXXX and say we recordable

discuss I'll to results our detail. Now more in financial ask Ryan

Ryan Hummer

Thank you, Robert.

decrease or cost quarter XX% second and yesterday's the seasonally-driven international offset revenue below define million, first revenue, or of total sequential XX% in quarter. U. our in and expense, to year prior quarter, the we million year second revenue higher XX% in of release, XXXX the prior S. in XX% $X.X was depreciation second with increases basis, quarter XX% earnings a quarter range markets revenue reported amortization to XX% On were the the second respectively Gross quarter. quarter profit, of XX% revenue. sales and excluding as our XX% total Canada. $X.X was in $XX.X of our in XX% second is As less of a which for compared of revenues in and by was guided the the which our million This than below

was sequential profit XX% of For revenue our $XX.X of million gross quarter or the in comparison, first a XXXX.

increases margin mix quarter to as associated the Our primarily percentage lower contributions decreased impact with fixed costs of the revenue our second revenue. well our geographic on chain, seasonally supply gross as and due the cost of

million year, expense, and expenses were $XX.X primarily which and the increased $X.X benefit of driven or administrative by than selling, quarter, Our including salary SG&A salary was and compensation general higher restorations in million quarter second last second increases.

for compared share-based to $XX.X Our the million quarter of compensation in with to categories, guided variances million our and range including favorably expense SG&A $XX.X litigation. of several favorable XXXX, second

compensation share-based and Our expense SG&A litigation. includes certain expenses, reported including non-recurring

expense expenses million share-based quarter, non-cash million. For totaled the and non-recurring litigation comp the $X.X $X.X totaled second

$X which year prior $X.X million Our million, in second compared to adjusted the negative EBITDA was in quarter negative the quarter. second

expense and was our non-controlling and to a million quarter minimal During attributable repeat the XXXX, interest second depreciation income $X.X of our amortization was in precision. there

now in the cash flow Turning to items balance sheet.

XX, of capital our was expenditures net million. reduction second free $X.X from for quarter million Our was total in were of new $XX.X flow flow $X.X the cash base in resulting ABL million we million, asset related with The based and $X.X net under operations and lending cash the our at primarily working June flow XXXX, debt facility modest cash quarter in was XXXX capital. seasonal On million. to undrawn. cash a XX, The $XX.X free for $X.X new borrowing had million June our

capital NCS at XXXX. million XX, of June net working addition, In $XX.X had

expect guidance and $XX to revenue $XX We quarter. million. the to for between million now third quarter Turning third be total currently our

to levels and U.S. also the half $XX.X be breakup. to between $XX to revenue of million our revenue our $X expect we $X after our as activity and XXXX, million million and $XX.X million, between expect in million $XX We be Canadian million first between lower from spring be revenue and international recovering rebounds

the margin our in XX%, between gross in XX% quarter activity international as third to and revenue reflecting We as well Canada, expect be the increased higher contribution.

the approximately for $X.X SG&A to and million reported in includes $X.X compensation litigation non-cash which between and approximately our share-based third $XX.X expect We expenses. million quarter, $XX.X be in expense million expense million

remarks. Robert XXXX hand to expense We expect to be full-year approximately and for guidance third closing over and depreciation $X.X it amortization our discuss to quarter million. I'll our

Robert Nipper

Ryan. again, Thanks,

million earnings our full-year opportunities The in is and with follows: full-year our of however, Our by and revenue to the guidance million U.S. Canada. international lower to consistent million we delayed unchanged, XXXX expect range currently contribution release. million $XX full-year EBITDA for of project is contribution adjusted being higher we $XXX from from due markets, calculations to as expect a $XX offset $XXX revenue

our We have and related lowered the revenue. mix due supply to to composition EBITDA impacts cost pressures the chain continued our range, of high-end throughout of our

year. million $X a gross XXXX our initial $X million capital of for million, expenditures from expect $X the reduction for be We to to expectations

leading to a working growth Canada. to our is of negative industry free modestly for net XX% year. cash in capital Given be meaningful expectations, anticipated the revenue of we Underpinning use XXXX to growth flow in activity growth expectations cash our XX% anticipate

in completed the XXXX. and expect respectively as least We and U.S. wells XX% to by drilled in increase XXXX compared XX%, at to

though revenue lag we grow activity Finally, in international growth to XX% at XXXX, market. expect the may industry least by international our

in and introduced through adoption like selected gun growth perforating service of to adoption our product system. activity underlying technologies and our increases in through Purple the our newly We exceed American Fire North lines expect growth industry market -- share revenue continued

have the of that meaningful half more with of increases will in impact customers price back year. also achieved the impact We the expect full our

adjusted reflecting during of which of benefit weighted the personnel the of achievement the second the lagged EBITDA year, of toward first cost. the the half of both revenue year, higher sales half will and increases annual that expect We and range cost be achieved guidance of pricing our increased the impact

Russia's conditions, developments in of interest based and market due current could to of including Central invasion the the including is limited Ukraine of not changes factors, to but outlook, increases to global related a rate which inflation. guidance change combat number impact on Our economic Bank to

I'll open we Q&A, for with the up brief a Before couple of call close comments.

of initiatives, We revenue in continue our revenue result guidance the growth of achieving would XX%. strong our on growth midpoint execute performance as to we approximately our build annual

the earnings. future infrastructure grow place leverage to have providing revenue growth, in We to support

our addressable successfully our technologies customers We continue to needs portfolio new expanding to market. of introduce meet the and adding our that

chain industry diligently supply are and are others and are increases price facing earlier year. managing positioned We in through from the our that challenges this achieved benefit we to

we the worked Chief Executive retiring. that voted week, NCS at announced finally, NCS as seat balance believe but the me of afternoon I'll over to job excellent this time I a years a eight continue leading he move with Directors and this X, life. effective Ryan XX-years Ryan position an team with field that know, I've unanimously NCS next continues this flexibility. of very I'll his outstanding liquidity exactly to and it's the amazing forward and Officer. company and chapter make at seeing of the tremendous And people company, strongly I've the Last my to with that, lead welcome NCS honor of with on through be operationally execution of Board as certainly to we the Our and to strategic working us we'll any life. November strong Board safety on with closely to appoint look providing choice Ryan role maintain do next the And Sunday After last and record many for the own. the we to is company's that, questions. a miss you sheet right some had hold stage of Hummer

Operator

question And is line that Bill, from (ph). and you have do your [Bill Austin] Instructions] question [Operator a is open.

Unidentified Analyst

Austin Bill gig. guys. Hey, congratulations Ryan on here, new the

Ryan Hummer

you, Thank Bill. Yes.

Robert Nipper

morning, Good Bill.

Unidentified Analyst

supply but it, more so thing, supply give issues of that lot you little on a but you're side, just seeing? bit Hey, might on talk it's would chain to anything I of you could be that to I the some the labor want able about one on you else know know for us. talked a be the color side still kind about chain if helpful

Ryan Hummer

into is line which of be Yes, across and would some I the it's systems, component Bill. product go in that steel, mean, [indiscernible] for pervasive the fracturing whether our some ways, main it’d and like we're some components around increases products and products well. elastomers also those And times there, construction just other materials. seals as go that but and our increased getting well into things seeing lead our

taking or we more front-end where of qualify a we're seeing. are approaches on times increases get to offset becoming increases working pricing certainly the vendors we're looking to we're So more We're cost lead also that to additional that customers a of with than seeing number the challenge. to our offset

Transportation, across you we're look the So vendors freight, and name then reduce effort group manufacturing there And pervasive chain the we to as a joint is good team industry. improve well. pieces supply seeing it deliverability. it to business costs new it, that our and other make of across can in sure and be and between to spot engineering our quickly that qualify

bit think the we requires I components levels. business, facing highest as far very is we the our relief our highest chain us see of little require started supply the that I industry a have challenge that at generally a as managing we've the today. priority But probably think for to

Unidentified Analyst

like were color continue more some sticking That would your guys price you could getting give there's you of Great, increases great. on be then it any And to that? are thanks. the ability do to if sounds

Ryan Hummer

robust through that talked a the the to It's from active a one next, quarter and the maybe and first for But third first tend half thing be kind season. the half bit we continuous about is little nuance second Bill. bit a Sure, way year little of the of given the us our us. through those to the and process a Canadian flow very for operations benefits quarter of, the business

for quarter reset spring customers honoring through first our most our with and breakup then ’XX of coming pricing the to are ’XX customers and we into the late So out with commitments early part our engaging in breakup. pricing 'XX of across

in continuously half were and of in majority to looking get get year. our see the increases second price the Canada, we certainly pricing while the this So you'll benefit from the really U.S. of

Unidentified Analyst

Ryan. back Thanks, over. it turn Great. I'll

Ryan Hummer

Thanks, Bill.

Aditya Ahluwalia

of Aditya question Hi, This a from And Ahluwalia. gentlem. Yes. your Arrowhead. couple questions. just Aditya had is I from next is

question. in and customers The is of onto of that first one some comments second I very margin supply is your are that. pass chain because some just some the wanted similar price because earlier to to in said you Bill's also hikes your you there color pressure, your able then

the just your really around you flexibility So I product So growth just share products. some the market that to to expecting question first you U.S. attributable will products you forward? give your continue you -- lot on please wanted comment them is discussions flexibility mean, probably to growth be your that of some Could going a of And market pressure on hikes? how expect price us color share are said And second get with shoulder much I how you're of kind are expecting question. clients showing my that? you was And do color this these had in if margins increase what just to could could which -- various lines, in? on an in your of some you increase to

Ryan Hummer

rate the start I cost pricing with I'll supply we positive, more pressures. implement sorry, to And up quickly. a starting to increases, pressures continuing able chain and is is as or of think first around see which Sure. -- catch pricing moderate, one we we're cost because the change

up think as challenges really where inflation couple you'll of which started had inflation So I a supply back we what get cost ability from the moderate before lag our impact benefit increases. we increases started margin and similar outweigh the impact cash to chain profile XXXX. the moderates, really our a can But middle to in see and to business, -- biggest of think we the pricing quarter

of just of a be their we'll So seeing they're think are but I think mentioned certainly a Obviously, a steel cost for recover where there, discussions input had other inflation there purchasing. are Those pressures are the constructive. categories facing. The discussions And and be may example, with business aware that lag. the bit but in I customers able customers our to we big that I are for us. easy, never are they're the costs

they see that that products. that casing, Our based with drill steel with their see customers pipe, drill they with other

share In offset of So we're are U.S. approaching I'd able say we're be pressures increase there certainly seeing. to our that not seeing couple the our to we're alone in distinct good a some second your to customers prices benefits. turning areas to the where cost question,

The line moved Purple Repeat process. very, have that Precision, first very is We've had business. field are introducing within XXXX we in the just product as the it. from trial We perforating through Fire revenue rapidly product that we new that minimal

product to We that trial working able increase to have our as out through through move good of there move field into been have continue expect eventually to the and trials, have of end status activities a with the our good commercial line it a we're to and fully that get partner that from we we and revenue out there product year line. and move --

areas call Powder quarter, second in half the a and the expect this Mid started the to of applications in the systems mentioned there addition, pickup in good starting are business then the had product to within some we've portfolio, introductions in well construction traction. some In U.S., few Continent. our Alaska, which Robert customer get which seen into Basin earlier we've that our the And the with River we of traditional new second activity year. fracturing continue a in

pick nice as us, So benefit is is well. there a activity for up which starting to

Aditya Ahluwalia

And luck That's luck with those endeavors. Robert role. comments. good information. your Ryan. your with certainly useful for future Thanks, new Good Thanks

Robert Nipper

you. Thank

Ryan Hummer

Thank you, All Aditya. right.

Operator

at And have for time. are no you there any other closing remarks questions Do us? this

Robert Nipper

team work Yes. here the have good industry. including shareholders only as and by and as and at our tremendous especially on the We're demonstrated team our research our and of call, I best On and in analysts people NCS everyone the board, our we Repeat our like thank the I appreciate team Precision. dedication the and behalf truly our believe cover NCS employees. management we'd who

about we more provide Our to paired disciplined cycle developing supply excellent and NCS is to enable to to look participate a fundamental products growth. NCS multi-year new with other today, industry We that successful. our interest team employees, on that stakeholders. believe forward I'm excited quarterly our to our services and in and how Multistage and be a call. talking demand we next that customers, and our positioned the in is strong continues favorable and will for deliver to customers our everyone's shareholders customers measured earnings concludes service with We And our appreciate are approach growth to dynamics benefits and operator. again in call

Operator

you. Thank And concludes this for Thank participating. today's you call. conference

You may now disconnect.

NCS Multistage (NCSM) 2 Aug 222022 Q2 Earnings call transcript