NCSM - Earnings call transcript Q1 2024 | NCS Multistage Holdings, Inc.

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Operator

Good day, and thank you for standing by, and welcome to the Q1 2024 NCS Multistage Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.I would now like to hand the conference over to your speaker today, Mike Morrison, CFO. Please go ahead.

Michael Morrison

Thank you, Justin, and thank you for joining the NCS Multistage First Quarter 2024 Conference Call.

Our call today will be led by our CEO, Ryan Hummer, and I will also provide comments.I want to remind listeners that some of today's comments include forward-looking statements such as our financial guidance and comments regarding our future expectations for financial results and business operations. to results and any to herein. subject cause that expectation are actual our differ statements many uncertainties risks could expressed These materially from refer the and cautions on forward-looking statements.Our annual latest Please as filings operations regarding most well included today and as SEC factors XX-K of our report risk for comments our to results Form recent to non-GAAP profit, in our flow non-controlling adjusted EBITDA, gross adjusted adjusted capital. margin, adjusted and less earnings release, interest distributions financial contain working net EBITDA measures, the cash gross following free margin, to of The and in non-GAAP details release, most the on underlying Ryan. the quarter ncsmultistage.com.I'll over comparable first financial reconciliations which provided these are website, measures found be turn our measures to can earnings GAAP now our call

Ryan Hummer

to analysts our investors, Mike, Thank to and conference NCS welcome you, quarter first strong is and joining a XXXX. call. off earnings XXXX in employees start our

million guided broad-based $X high revenue our Our the end our was exceeded guided of quarter achieved range revenue the we as largest XX%, Canada.Our The quarter. our excludes markets, of of high million. exceeded range or of end first the of nearly by strength $XX.X range with amortization gross each outperformance guided coming for Canadian from and relative adjusted and depreciation which within margin U.S., our expense international the for was

savings resulting expenses intellectual in and cost in was a lower control agreement year, than million of year-over-year technical from a reduction to to $X.X increase the the also related benefits Oman. that in as commitment with quarter property of quarter income from quarter our fees.We income Our litigation-related royalty the an compared expense first partner benefited of for from a licensing SG&A primarily local XXXX, million $XX.X last in other demonstrate and services the first professional to measures our

improvement creating slide of of referenced quarter of in our prior our NCS' $X examples the Slide sequential a and $X.X for We've that and year-over-year improvement EBITDA strategy first our provide calls, million progress. to strategies is million exceeded $X.X of million for our I've of website, represents included for estimate million $X XX, and stakeholders. a adjusted $X.X million.In Our our illustrate core our value helps investor which on to available presentation, a new earnings

and capture relationships opportunities through to construction is X% strength our the Canada. of core to strategy rig Canada first our as commitment compared demonstrated particular, Canada upon and our systems in first in systems of XXXX XXXX.Our for of same to and product developed period. The revenue Express thus quarter and customer our in market in We've lines.In additional well This opportunities PurpleSeal reflects business the other strategy increased grow far to of customers plug additional customer market leverage with performance positions. count in million FracSure to in systems pull despite by leading for over this frac to fracturing build completions and revenue the plug and perf our base Canada X% continue QX the fracturing we to our our the position initiatives time average across a in $XX reduction the

sliding benefiting North in a year, sleeves investments. having to now from position opportunities. East customer in opportunities in the Our on sold base far We've to growth Sea long-term in company new second particular.We We're good are and efforts Middle customer North our capitalize international the to core strategy offshore the the off so to start to discussed is a grow strategic for Sea previously first this our and these quarter.

sliding increasing, tracing activity tracer of are quarter, In East, improve in with on sleeves meaningful delivery and to a another seasonal the diagnostics leading supporting completion to unconventional second the in Middle completed activity base. of yet to North move installation we Sea for April, the customer.In we basis a East. addition, the the Sea company we we As their resource expect increase North development new multiple in expected first plans national pads Middle oil the activity in experiencing for a including

opportunity full across to the tireless that at and We the and quarter, unconventional activity customer wells for tackle of awarded expected the guidance for the addition, million first $X.X value would service pads. additional our organization and similar on would expect revenues possible only of services for our customer, year supporting can has $X.X the is million. logistical revenue least tracer second procurement jobs remainder to to well NCS individuals international compares provide the this our million the half bring the approximate of participate process.Including conventional XXXX, outstanding between projects international in throughout over been for $X.X our work the educate our XXXX and to the effort This X of the reporting for our revenue of same because XXXX.In the XXXX half of trace first customer the challenges midpoint diagnostics of the to to exceed in international

North each period, of to reminder, solutions for As third NCS XXXX, million $XX outside a highlighting is over through exceeded that our high during international of a strategy challenges. opportunity core million to revenue year America.The XXXX for full commercialize customer complex of $XX NCS reaching innovative for

customer customers' the U.S. validation second at highlight and we be influential testing regions.We've year operations. ever for that to just gun program.We help the markets these fiber-optic new this new first and international the sleeves. quarter, for applications market entry in developed an completion objectives a Precision, count technology SAGD oil the will highest This with further had fracturing in products was with requirements. deepwater applications initial utilize conjunction will quarter is additional other and a prior of our oriented field completed advance an field the system into this during so time. successfully system in technology pinpoint a onshore a at expect spoke obtaining in for We over some a with install this XXX for trials designed our extensively exciting our utilizing systems successful and horizontal represent sleeve expect The well to had successful the Canada deepwater company internal to trial to perforating This for Mexico year. In we potential trials in entering tied Repeat of well our aligned regions. and earlier for I this on projects. optimize and to continue I'll our to have over technology briefly waterflood market for We we a and customers first call, NCS, Gulf

across results developments first technology looking and In projects, we our addition review for which second forward to quarter guidance as they discussing now quarter. I'm our several lines, product have for the will various the these our roll to other underway out.Mike

Michael Morrison

Thank you, Ryan.

As increase earnings XX%. in a release, revenues X% in saw decrease with million, X% revenues. our revenues and reported year-over-year Canadian we Despite in yesterday's the rig international U.S. XX%, our and up were a respectively, increase modest first our revenues down quarter a count, slight average Canadian our $XX.X and

experienced a in frac growth revenues systems by Sea. North customer of the driven to Additionally, our the international sale a

some continue increased and Canada the our by XX%, first to by U.S. revenues customer international XX% revenues nearly activity.Sequentially, doubled. impacted the up quarter gas have up lower Our revenues with XX% curtailed be in that while natural U.S. prices

XXXX. profit, total the million $XX.X gross first less adjusted depreciation cost of in excluding total defined Our amortization quarter sales, and as revenues of expense was

our XXXX, was XX%, margin and administrative gross period XX% same in last due by our year. gross in restructuring first down for The to for compared to adjusted Our to spend. XX% SG&A streamline margin the efforts operations from the adjusted compared in $X.X period costs part was $XX.X significant quarter the million XXXX.Selling, million up fourth but better sequentially for and XXXX of the were of same our quarter, to general down reduction leverage

for in the million and distributions million, in the quarter balance share share XXXX net quarter, for of litigation of diluted from to period XXXX. of earnings million million quarter interest to reversed recorded fourth the by $X.X prior free For non-controlling that $X.XX XXXX.Our a of same to quarter cash improvement turning in flows cash impacted of $X.XX was $XX or of the in $X.X settled and activities million less provision $XX.X period $X.X XXXX.Now was we a the of compared EBITDA first was net the in $X.X or were Adjusted and first same the the net reported cash loss of per loss year million, first sheet. flow respectively. we per later $X.X income to loss operating items in uses a flow Cash million an

year cash for positive. forecast to flow Our be is the XXXX full free of

offset partially of the borrowings XXXX, promissory second turning million by in of primarily XX, in net $X resulting million cash ABL which April.Now finance points end inventory balances.On our position to our quarter. capital under and of At to the primarily due few million, $X.X had revenue million. currently quarter to working and However, the cash cash expect in flow to obligations, had our approximately million. million. in a of increase base total Repeat for full This an borrowing total an in similar XXXX, was outstanding $XX of repaid We part debt reduction March in of $XX.X Facility of of was to the guidance we $X our a was receivable, March negative in first $XX the a of a was consists net accounts $X.X increase availability in quarter undrawn lease note that $XX in million due under positive million range second

our breakup, to to to of remarks. amortization adjusted that, million for in to guidance breakeven depreciation the the expect to million approximately Ryan a $XX million of XX%, between of second million, We the to margin adjusted for to revenues over $X.X gross our quarter Due back our an closing I'll million hand revenue between it be range improvement expect adjusted $XX negative our to million.With and full Canadian spring Canadian and expense and gross EBITDA $X and second to international $X.X our year and quarter of million.We be $XX.X seasonal XXXX. XXXX impact and to expect margin we $X.X U.S. XX% discuss of revenue million be $XX.X

Ryan Hummer

increases only maintains for the revenue full of Thanks, slight million. and of making guidance to the guidance by We currently million Mike. This of end $X the million XXXX top $XXX to our end $XXX full range time. adjustments at this We're range. low expect revenue the year year

XXXX, access like by expenses particular.We're driving primarily in line in activity product come Canada, continue facility dry Canadian some or our Western Systems are customers to the and online the preferential cautiously activity expect in the sales this we to conditions optimistic LNG Repeat an our we fundamental at in revenue season fundamental to drought well. international at as guidance in the fresh Fracturing dollar There reminder, 'XX, coming oil is a a the point, disruption drivers to Canada. reduced, increases If production and activity have lower this for from in North quarter Canadian in that TMX prospects. and the activity linked supporting active result wildfire Middle increased wildfire markets, and firefighting lower but in and operating could are completions U.S. will exist Canadian to to as about online addition, facilities agricultural can in reduce supports customer support least which U.S. dollar. in the strong As natural pipeline our could this our have did increased water spring These tempered we the Sea -- growth of access commissioning.In dollars, freshwater.At from and U.S. sell result positive East, incorporates advance our prices which have Precision at oil customers activity be gas in would conditions including could and condensate strong factors Canadian drought Canada due is activity

So customer our is million midpoint capitalization balance peers. EBITDA $XX.X to initiatives publicly other traded investor of $X over the $X on in second the consistent to current with year. NCS to million. of EBITDA XXXX a that and we revenue fixed charts our spring which we working wet activity the of of gross our from million to is adjusted and midpoint could business oilfield growth.We interests the the midpoint years, and over with $X.X represents we investment anticipate below bottom benefit certainly that billion.The in non-controlling increase the of end.Due less the capital more on XX% our our favorable adjusted cash equipment Canadian a revenue half with illustrated for continue million strong a the $X.X revenue supporting in earnings XX the and for XXXX increase to of that impact the our million XXXX be for the $XX.X analyst million top growth a EBITDA both levels reflecting growth $X range our of This there revenue expect million, could the The thus and of far, The be active if to despite by weighted is EBITDA a benchmarks expect relatively believe will expected the modest presentation, free of with of have and earnings prior range range, in revenue $X expenses.We above margin be We've EBITDA us the to expectation us positions environment traded net for increases range season. fire capital annual and $XX.X with growth as undertaken and our NCS industry to we at from to favorably generate range is the Slide midpoint distributions operating million year-over-year guidance our achievement that and seasonality between the paired our of and implied to median set. that to services of adjusted amongst increase result of and sheet, adjusted guidance group consensus the peer generate $XX expenditures publicly peers by market optimization year current the flow million incremental business illustrate an in increased after in

capitalization was Another the ratio for our at chart the XX, that slide December on set, reflecting demonstrates median peer XXXX, debt the sheet. balance our to resilient below

the not multiple trading turn favorable growth enterprise of with profile is this the multiple, below reflected XXXX However, in was lowest core X of organic the and to multiple EBITDA value generating value in development. peer the from stakeholders aimed median.Before strategies that we couple Q&A, we put multiple X.Xx below comments. to next peer sheet and I'll close through in with technology growth X benefiting balance place open turns our the which that brief call at at XXXX, a our approximately and We're for

in by markets, would the support revenue infrastructure future and at growth have our quarter. by to leverage EBITDA XXXX, grow midpoint a by of end We in first with demonstrated sheet of our our of for to maintained guidance balance current strong $XX over annual the a the of million XX%. guidance cash adjusted X% position liquidity over balance We and geographic achieving the providing revenue our range our place grow each earnings.As

that we with and needs XXXX, from generating introduction continue to questions. balance free financial benefit expanding expect positive our market.With in cash the flexibility.Finally, that adding and any successful providing our addition, In technologies meet new us welcome addressable portfolio to our we'd by of we that, to cash flow strategic of add customers, the to

Operator

our first Storms And Dave from Instructions] Stonegate. question from [Operator comes

David Joseph Storms

raised see What the could the also in you to we or start hoping that to markets It's would see need either with of raise low guidance? end guidance. you've great line the to the elsewhere that top top Just end. international

Ryan Hummer

Thanks, Appreciate Dave. question. Sure. the

really taking now and the is strong the a for will us, biggest I we outlined Canada, thing persist the the think throughout conservative that market. fundamental what during is think I to are relatively year. Canadian really, we think a for call backdrop approach that right I

far, certainly easy. are of of There active a However, there's we very coming aware so had wildfire a you conditions. fortunate a but couple last season spring drought years wet it's that been year.We're into was XXXX, relatively that extended

their little potential to of move and think for difficult any. we on more customers into second the reduced So I access prospects for if so bit through the think a around being understand months.But what as the freshwater some bit impact will that right activity potential the quarter the it's we're that -- I we extent if side find completion be, just as summer a cautious now completions our whether move

I think bit have whether more really that's where we assessing there's end to range as a some confidence well. upside in top the of the

David Joseph Storms

$XX going that that at with mentioned What does like? current so that year. be Is you to then that And operate a markets? helpful. Is look getting around that? to or used What's cataloged get companies? to going pathway Very Understood. markets new to the to be million back addressing international

Ryan Hummer

Yes. Thanks.

Dave. question, great Another

I And it. path on, we're path to there frankly. are think the that quite to the components X is

really think had in very we've is we kind our X base in with discussed, forward We looking as customers to period, we're called diagnostics out referred qualified the been who additional that in time.And products Aker to customer different work construction customer that Middle I really in companies with like they're North right those well be we that online our the which and as XXXX, at those we've have in consistent of to we've that been good in during more adding active the saw active Sea customer you a getting the Aker and really we of in was Sea. North one one level there. first we're back of work that move we've forward this look who represent Sea looking We're over North the year. and Middle would in the the anchor years.And is into other more or work field prior know And development a to with projects would think activity and and as the tracer BP, we'll you East, least to bring pair now for both as doing XXXX what lot months spot East.

that revenue additional to So North during the those we are sorts years. on East, of that path with that those together towards opportunities Sea hitting we think saw prior saw tied with the the in that the levels historical we activity back period Middle in profile I

Operator

Partners. And McLean from Daniel Energy our next question from comes Blake

Blake McLean

the kind we So revenue next I of a more or color was associated of like to sort frame hoping what that X of with how works. kind and timing path about you forward the that whatever provide bit could opportunity little think set, should on over looks offshore time year incremental or

Ryan Hummer

Sure. Yes, there. the I happy to do best can

this large year, that we're in.And in particular, work up is more a that attractive, with represent well necessarily number to well that scope development we that really are the to North for have on before. sets customers mentioned basis. a again, year Norwegian multiple of programs will the could the so wells in work frame. say some operating North on a on customers would us they're we the pair forward. I have larger single programs application, year And opportunities with pretty any would going think that's some very but one time for we project the for for bit I'd on to per side, that same in consistent ramp expect not next to but Sea X deepwater the the little develop. more participate not well year, I going the the than is, a more see And be individually, those work the we Sea be technology ever North stage have We starting working So It U.K. for that the customers, Sea, there development one side, count but longer

be opportunities per move forward So small again, that for pretty a would handful wells company.And well develop be that I would pick up first but a those may impactful ramping as year, up would XXXX a and until really longer-term over could but we that a of have and beyond. that you'd individual more time think see well frame. XXXX, in in us don't

Blake McLean

the just should set you sort in zooming be to a build think there? think maybe multi-year the things we guys have Middle of last doing you sort of That's opportunity How you helpful. East? yourselves bit. out where plan Do there, think development you and really sales internationally like? over questions do building that diagnostics that sense up business sort have one about there? of of team you tee perspective? Maybe makes the out specifically of if And and do do the more, does execute What -- that place, about on And look and well do and of How how again successful we little it just a in are the think you a team to tracer that, you of out? it some from kind set the sort where do

Ryan Hummer

Yes.

Another good question. really

say about teams at the place I'd for think development what business we've we international So is the right got the international when in strategies group the highest and and group. our from the teams level, leadership

think can We us we that process partners very product geographies Oman in our the are our with various additional local asset may work helping a what very procurement approvals international managers quickly in in where each in out in lines, and Saudi, kind regions strong are of and of and aligned the various whatever the who call getting from position navigate without be. to of particularly, getting case are catalog the and

to opportunity optimize their and trial it from, production a East our having for for into utilized opportunity these products a tracer customer, very say services development resource where that Middle customer call very, and particular, is resource them very the executing really are there moving big in -- customer this technology there year plans. tracer of is diagnostics, us help a I'd understand that on -- utilizing and projects period their their in that early their for in unconventional it, unconventional development we're that So valuable mode.The

where time there, North development good that probably of to from with we're personnel.Right operations mobilizing runway that in people a be from Middle support some additional there's America, we'll Argentina, the East. will to over now, work China from think I service So need we'll

So time, strategic for and we'll a footprint our investments in business. lab within region make the we as other whether established look before some well, investments our we'd additional of to also within I'd that own probably of there. may have in local more And once record in only supporting partners. of that's capital and but a both markets that the several call light some headcount revenue some -- relatively deploy folks to personnel, investment need make types we what sort track earnings tracer some sort we've But do years of robust relatively into those over

Blake McLean

Got walking mind. don't provide a in on the in fleet detail. you it. just highlighted remarks? that Could Thanks one more bit that some you more, for you guys I've got through prepared if color your

Ryan Hummer

Sure.

optics. I that right? think with U.S. in fiber you're the one the talking about Is the

Blake McLean

Yes.

Ryan Hummer

Yes.

interesting pretty project. a that's So

in U.S., well. customer to So waterflood developed to it's have the able unique it's was what really especially somewhat -- that optic vertical horizontally. there, the -- line This projects in an is area that do run used where we're historically, injectors. And wants fiber a project, they're

ability But the many customer data.So we're as there and to would have sleeves horizontal number to the be for very properly, that's as a a well-known in ports will that. execute more you're to is, access table. going if to use fiber large is of able a the it's take of not sleeves to that reason and one, your that fiber risk to they'll that lateral. off to waterflood part aligned opposed between of cut accidentally the along perf if points to having looking that sliding of to going able clamped cable program The that a sleeves they're have be that shoot importantly, well, acquire optic optimize plug cable and So your risk installed our off well channel to and perforation it.And have the

reclosable in the value and certain the go the indicated the a that just water water will specifically customer in fiber in ways. sliding well, And number customer deployment the that's customer again, those for the the technology. benefit help And by sleeves with to parts areas. that in shut piece sleeves do of if sees that the we our breakthrough is So of can area off through and maximize of breakthrough what installing other by sleeves, manipulate

Operator

Instructions] now I And like I to further am closing back no remarks. [Operator turn Ryan CEO, the for would questions. call showing to Hummer, over

Ryan Hummer

earnings as management including our Thank Justin. continues you, new we on our today, and products to NCS Precision right. demonstrated team I quarterly is excellent like talking next best call. All everyone's Board, in industry.Our to and customers appreciate by and to the good behalf especially developing I On All our NCS and be everyone long-term more provide on here services to forward look will interest that team of We're call enable the analysts right. believe to our dedication work employees. we'd and to thank truly our service the tremendous team and customers the Repeat we implement and shareholders, again our we team We our our people, at successful. appreciate have strategy. as only our and Multistage, as

Operator

This concludes today's conference call. you for Thank participating.

You disconnect. may now

NCS Multistage (NCSM) 2 May 242024 Q1 Earnings call transcript