NCSM - Earnings call transcript Q3 2024 | NCS Multistage Holdings, Inc.

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

Operator

Good day, and thank you for standing by. Welcome to the Third Quarter 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, Chief Financial Officer. Please go ahead.

Michael Morrison

thank Conference joining Call. and Third NCS Didi, XXXX Quarter you, you the for Multistage Thank

comments. Our our and provide CEO, today Ryan call will Hummer, I be will led by also

our of I risks that today's as want and financial expectations business factors call. most differ uncertainties results materially from and could future expectation guidance Please listeners are operations. our Form to that These refer our this and comments filings to regarding forward-looking annual actual statements latest to results statements remind statements. include such financial XX-K and recent for expressed any cause on and some report SEC on subject forward-looking our for cautions to risk

included capital. non-GAAP measures: release, earnings non-GAAP the net which to and earnings adjusted less comments over website, the reconciliations found following noncontrolling are GAAP EBITDA, can quarter's contain Adjusted financial ncsmultistage.com. I'll to comparable be gross in flow our most the on adjusted These well today in margin, third of to Our as gross call turn measures our working presented financial release, distributions our now interest EBITDA as measures adjusted margin, Ryan. the cash profit, and free operations results

Ryan Hummer

throughout investors, and Mike, earnings performance welcome continued and you, XXXX Thank the to analysts XXXX. third has joining strong its quarter our NCS employees conference NCS call.

prior year Canada earnings in provided at increases revenue $XX range international call. the XX% was of to million and quarter of U.S., year-over-year third the high by each Reflecting Our last the markets. end increased the our on guided and of compared

XX% over of last same the $XXX the for first of year. revenue X million represents XXXX a increase Our period months

amortization last our $XX.X the excludes supported represents by on higher cost revenue. XXXX, than international realized based bonus Our depreciation the XX% offset for of of by end margin-accretive quarter the reductions. year million expense partially gross and other third adjusted SG&A quarter, benefit incentive quarter accruals our favorable expense guided higher for range was the measures which was margin, operating of high and million expense from implemented the reflecting results, $X.X savings and

by SG&A months compared XXXX. expense same as is the to lower for first in million period of $X.X XXXX X the

adjusted million our quarter of million range Our for guided EBITDA $X $X.X of exceeded million. the $X to

contributing million adjusted Our $X.X gross $XX.X million first growth, expenses income adjusted the same to percentage, of income each compared as year-over-year revenue incremental from part with other higher in in or evident SG&A of improved results. shareholders. NCS lower includes well is to our as more EBITDA months XXXX. This royalty XXXX a for X included favorable net income as period our in improvement This the business to contributions also margin our by

share. $X.X million diluted income includes seasonally first income was quarter quarter, for third per the $X.XX $X.XX slower per year, During which months X the net was Net our diluted million or or $X.X of share. second the

remains balance Our sheet strong.

$XX.X Our million, September and XX. $XX balance liquidity on respectively, total were and cash million over

million for $X.X first $X.X XXXX, last cash of an distributions representing the the year. improvement period to was to compared noncontrolling months free less X Our same interest flow of million

investor progress. creating referenced calls, this our of our for Slide earnings I examples core presentation provides value in XX strategies and for prior stakeholders. In strategy our NCS' illustrates

market value fracturing unique positions. we systems, strategy I'll continue core deliver for start build where to with upon is our customers. first The to leading our

customer operations wells. of thresholds. exceeded to operations. shut customers quarter, forced During our during frac established events a Previously, is are seismic once they the activity while to to sleeve These fracturing the events sliding impact adopted down required mitigate Canada third monitor in their customer this solutions seismic seismic

up operator hundred and activity up hole Once back different few seismic adopted resume NCS feet to complete, bypassed. The sacrificing recently the mitigate the make, operations, to able section move customer the to a of to maintaining customer previously zone well a the efficiency. the Shift-Frac-Close portion sliding decision pressure moved of resumed simply encountered, the operations, that in since the the has and When stages To been efficiency the area difficult bypassed to this, the of customer wait elevated is well. wellbore the was a either the to sleeves had were a run or remaining dissipated where region, had process. our stimulate lateral decreasing employing

our sites technology, deliver line. and This and completion perhaps our techniques to type in our importantly, that differentiated We've our the not of bring leading robust quality alternative customers' of solution service well represents is product demonstrated available of the more when the solutions and tools build sleeves, the on customers to also to challenges. our using positions strategy our simply diagnostics highlights our valuable expertise people to tracer market benefits multicycle

capitalize a for ties provided on geothermal U.S. this which strategy, is core region. quarter, in and another services directly customers in traced which Sea, to NCS latter high-profile the a we the was in The diagnostics first for the During The North several we've provide also investments tracer delivering international XXXX to growth well to well capture are the success outside further NCS for in America to coming on results foundation of in international strong and we've and offshore last made opportunities. years strategic over North years. initiatives implemented and opportunities the

the year million first full revenue has gross XXXX exceeded supporting of increase already months for our of our X adjusted international $XX revenue, year-over-year in XXXX international Our margin.

annual more record $XX in XXXX. of was which established or meet markets million, we than exceed revenue XXXX, prior For expect of NCS' level international from to

activity the revenue the period accelerates. an for increased We're from Vaca grown North first Argentina in for of activity in are this the in the base to increase in Sea XXXX, are work activity services years. total key tracer to months we've from same in several done complements our We've as For diagnostics East, years represented proceeding customer several as the our X over X% fracturing tracer our the and systems our that revenue that the year. us, expanded XX% Middle region. base International will of Sea benefiting commercialize offering customers in projects multi-well North development diagnostics and the customer This Muerta with our about next optimistic grow additional span last

We unconventional new benefit for region. portfolio. contracts East Supporting in from well the also resource conventional in expect to construction the Middle signed and our development

for NCS to The innovative solutions customer to challenges. third commercialize strategy core complex is

exciting We a our larger X-inch new I'll of be regions. with frac run and markets have service We version this field successfully obtaining enter tool objectives and briefly to projects. sleeve to developed tied of internal and a year few these products for new casing. trials to highlight

this either time, a We expect system this XXXX customer run Alaska. in for year the in early for or to operating first later

including development SAGD which This flow capture applications. for the seeking expands rates, in addressable projects is our market, us offshore water to customer geothermal carbon disposal greater enabling wells, markets, certain participate and sequestration, and

agreement the of the XXXX. call, the Middle I'm product products performance, AirLock treating We're during competing successful. quarter our early The success indicated for compared a mentioned in on final of we've During within in were achieved provides enhanced call increased customer stages pressure trials The access. very construction dissolvable to plugs. reservoir good Surface plug our well customer our multiple previously pressures last dissolvable ceiling this as negotiating line. runs pleased this fourth additional high-pressure frac the last to high-performance of run East. the development which purchasing with quarter with AirLock and mentioned I of that multiyear in quarter commercial expanded a the announce on

this expand salinity We accelerate and to and conditions. expect sizes accommodate in additional trials fourth we'll to to offering quarter, new the higher

storage During in customers' both By capture the provided unique using zones the we in their sequestration fracturing technology, capacity of vertical reservoirs. test injectivity multiple wells the customers early and quarter, third fourth can U.S. in and quarter solutions and our systems completion to thoroughly these carbon the Canada. and

In have will provide on quarter which future the in Mike our underway several developments technology speak in to the results guidance more more we'll product fourth calls. review addition, third the our now and detail detail across lines, for we various other quarter. for

Michael Morrison

you, Ryan. Thank

yesterday's $XX driven U.S. XX% Sea up year-over-year, As increase and continues our up our The tracer X%. revenues third a reported revenues Middle increase work in in North million, up revenues frac international by XX%, international quarter be to Canadian release, $XX.X our revenues revenues East and in were systems. earnings with the

in activity quarter. U.S. the third quarter plug by by due reflecting in modest the last revenues revenues systems higher The compared XXXX in seasonality to in XX% our repeat with increased Our composite reflect perforating with cells spring revenues precision. XXX%, Canada increasing to Canadian associated Sequentially, gun the year. increase second fracturing breakup in higher part our by was in

East in international in XX% tracer This partially to and increase decline decline timing work the due of in offset Middle the a service U.S.. of a by X% primarily was revenues, the

which amortization and Our expense excludes in $XX.X adjusted depreciation profit, was XXXX. third of the quarter gross million

Our for $X.X income was and royalty licensing quarter included and of XXXX. adjusted to the to the that the quarter invoices contingency third associated in not margin fee by of X XXXX the third other our was recovery intellectual the third of year. our Other gross in recur an legal million relates ago, property. gross XXXX margin to reversal down compared XX% $XXX,XXX the adjusted Compared of improvement quarter XX%, income settlement last of as was income year the primarily with the results the unpaid legal approximately generated did

was of period compared the Our improvement third quarter EBITDA an XXXX million, same to adjusted in $X.X for the XXXX. $XXX,XXX of

increased partially performance. associated offset improved revenues, reflects year-to-date and increase EBITDA our increase improved incentive SG&A non-bonus adjusted in bonus income an operating by royalty with gross Our savings an margin, accruals in

turning the balance sheet. Now to

$X.X net and $XX availability million ABL revolving of base lease facility. a million. our our million, entirely position was obligations, total over XX, a credit total we including consisted million, facility The resulting million, cash had and in $XX.X resulting debt liquidity borrowing which in As positive September of finance in under availability cash under of of of $XX.X $X.X cash undrawn

in guidance We $XX a $XX million. total million now the for points expect to few range fourth quarter. of Turning currently quarter fourth to of revenue the

million revenue the in million expect range U.S. to of We revenue million. $X $XX of million $X million of $X to million $XX $XX international and revenue Canadian to

margin our XX%. gross between XX% expect adjusted be We and to

million. expect income to $X.X We other of $X.X million

million, $X.X amortization from and We to $X.X in million. range to million the expect $X.X our EBITDA expense depreciation quarter, $X.X million fourth to be adjusted approximately to

remarks. Ryan discuss guidance our that, over closing hand and for year XXXX I'll back full With to it to

Ryan Hummer

Thank you, Mike.

to $XX So first our guidance. an with at increase through and I'll revenue guidance a the full that to annual range Mike of of the initial million. provided, revenue last million This of million revenue X and of $X.X year months full would of is We've EBITDA our increase million. March. of implied in full from The range an our This margin $XXX.X the increase represent XX%, range by guidance of quarter million million incremental XXXX. $XX results than of $XX.X for an by We the EBITDA which approximately $X.X million million with guidance. increase to year-over-year adjusted the midpoint $X million increased midpoint guidance QX adjusted represents year EBITDA year to the on of range adjusted from recap the the midpoint current compared $XXX.X increase $XX.X $X.X million, midpoint our more just the of provided the to expect our currently midpoint increases the a XX%

by of impact relatively our royalty the an undertaken additional XXXX, in of recurring NCS increase the reflects intellectual income operating business and fixed licensing in optimization initiatives expenses from This a property.

Reflecting which of our capital-light less business. expect million, $X.X XXXX expenditures the net X% be for to revenue. We than of nature is approximately capital our

investment in We is after flow capital and generate working $XX to our despite XXXX distributions $X million in to noncontrolling expect interests. modest revenue to improved a growth. between in support the million free net cash This

with expected other result, $XX share. to traded services our of that amongst in cash a expect earnings sheet, $X strong year diluted As our at We equipment we our and publicly the revenue current us favorably million, paired than the the environment positions balance believe per end growth and industry which exceed position more peers. is oilfield

median The for of illustrate traded well to NCS investor peer XXXX XX set. generate about $X a for billion. benchmarks to the analyst revenue NCS publicly Slide presentation consensus and capitalizations expected group earnings of below growth and is the our revenue with that relative market peers charts that above is EBITDA growth of

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

peer which sheet lowest is EBITDA. the that turn our multiple than below profile trading and reflected balance more the to favorable next Xx at in the multiple multiple, X adjusted value currently of below is XXXX X growth in However, peer this with not Nearly median. turns multiple enterprise

the close stakeholders up I'll penetration the development. through strategies We're for comments. for our of Q&A, implemented Before couple technology core aimed we from XXXX benefiting in organic value and open call with market growth, a at brief generating

We the earnings. geographic to place providing in each future growth markets, have infrastructure of grow revenue to our support in leverage

maintain our the of guidance demonstrated at XXXX, our cash the over grow by revenue current for and As balance achieving strong with of range $XX by adjusted third a quarter. position sheet approximately midpoint XX% annual end would our by our balance XX%. We and guidance of liquidity the EBITDA a million

free additional providing flexibility. mentioned, cash in expect cash add additional fourth that flow thereafter, financial and the generating by to strategic As we and quarter to balance

from additional of our portfolio of that meet market. benefit applications for our and technologies and to products expanding the our continue customers, adding introduction existing the needs we both successful addressable services new Finally, to and our

With that, we welcome any questions.

Operator

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

David Joseph Storms

kind might like this a inventory Canadian bit Both markets. of showed try the really an on cadence to customers maybe Does does get to market? U.S. feel both in ahead hoping as quarter-over-quarter of to a growth typical the product year-over-year. you? touch this the of and build sales strong Or seem like Just

Ryan Hummer

will really in products out. lead a well-to-well work, say, on get Almost repeat course basis. have of I'd operations. what And well products, more relatively the of What called America that Yes. systems they're our Dave, specific normal short that fracturing it's precision. we time, Usually, a whether to sales make work, construction North be all called out to

of plugs, a building But For cycle full customers once. get all I of short relatively and frac the it think may of inventory. would activity as delivered pad worth at gets not you that

David Joseph Storms

around at Understood. the off the again threw some And of then tracer that of just circumstances looking remind bit? a markets. little us in Can quarter you work the East international the just maybe timing the the Middle

Ryan Hummer

absolutely. Yes,

East. we I'll certain the a process came a It's as and So long in obviously into Middle year services products maybe back bit. and to step this qualify little

that unconventional So Middle resource we into on an coming year, we the in for in minimum the expectation East work had and unconventional customer would pads X development the their of a a provide local gas work basis. wells that, that's addition conventional to pumping well, on tracer some development. call-out pressure services And diagnostics we and as more in more the through a companies to of

moved So the that's through year. progressed as we've

well the couple with one on We with X right have to revenue with to then those We're well involved, reporting. the There's way out generate third a completed to different the The on guess, we I another of injecting and the respect another phases for of that recognize injection sampling injection, pad and one those. respect pads. now. respect

side. is work no more in schedule. that things on so, have that we're month where is with of been it's been circumstances kind say I backfilled Middle those extent work with year. to that diagnostics or to work, the delays tracing the any by been what slow pieces a general, pad the see have and in tracer may And any or East conventional revenue delay on that big any and in more doing you'll in back of running some through less So bits pushed been of the respect projects. but But and there's There come the

David Joseph Storms

just Understood. And couple me. helpful. That's more a for very then

into that to of for X you're targeting want you'd us? low-hanging any On early is XXXX the there months, the next to X fruit in maybe expense half highlight the front, that

Ryan Hummer

fruit, Dave. low-hanging I we're Look, think beyond

us been paying XXXX initiatives XXXX, over you've SG&A, as cost us a our year. flat throughout fruit bearing reduction those time, this took for in think some we expenses helping and I operating keep way are in following and dividends us to our that's

insurance We reduce done spend. continue our some We've to make things to this year progress.

look try to third-party bring down. those costs example, providers at For service continue contracts we with to to

structure this hard and the real But able doing to is say we it's I to work keep capture at beyond we're being that organization. work across our low-hanging hard maintain everything cost that we do would but point, that fruit

David Joseph Storms

more And we would yet. then guiding I unusual a the seeing to are at maybe me, perfect. on anything just you're That's cadences know for XXXX throw for But off just that highlight macro XXXX? for not us curious where, if more XXXX X as anything looking you're maybe of some level. seasonal for to

Ryan Hummer

certainly we're the point where point. we'd XXXX not be Sure, this yes. And guiding to to at

expectations. So sort or we maybe what I'll it on from cover might conditions see of broadly market just

U.S., activity levels. second that the here see the that XXXX think less be weeks that I we've And And on might with think more U.S. slowness an drilling completion general kind December, of the at right absent basis in consistent now, and in talking in on in industry view be I'm of that, I that for XXXX. half our for seen about would in the or of last carries any it but level. you X might activity

I'd some to activity grow as with come on, Canada, the has the would The that this which it's year year. of continue more been Canadian next market TMX expect activity. oil-directed supported In supported has pipeline

local Canada, gas should to in help participants of the growing natural and you LNG production there, that commissioned then I feed pricing to need pricing to in in hub year Canada get project the next facility. all know, be up which think as improved that also will market the their will clean LNG

in growth year. single-digit positioned growth internationally, in about market. market structural from then and that good the it's in think pretty grow, expect Argentina continue I for strong Muerta next where think and standpoint Vaca I'd feel the the years few when will next low a And Canadian we're we So although about to Canadian

will Norway where think projects is Middle And focused to think continue in the East continues I flow Middle the to into in East, unconventional their which I projects, international with we're well. on grow. investment as

David Joseph Storms

the Good That's in quarter. incredibly fourth helpful. luck

Operator

Our with next from question Energy comes Daniel John Partners. Daniel

John Daniel

guys Ryan, the on study one, driving. you first that referenced, case I was the

that so take customers present I study do notes, to then case about you couldn't seismicity. how apologize. that I So the And you when But and within you it similar take talked that, referenced like area?

curious, that. the You stuff how to that I or headaches and SWDs maybe all does customers that's take know to that I'm But hear just West present tied more like do customers? believers? to take to ] how Oklahoma. other about you new [ and Texas and it and long like convert them And

Ryan Hummer

it's market Yes, the just And are certainly with proactive John. question, in I a great the is the in the active, one customers quite true think things sharing information Canada is of more each other, frankly. are of that and general operators that

of that some is naturally So it of you happens and the on have other well the -- that way other operator course, happens, participants.

participants operational that in historical other who happening ownership project, efficient less the to enable partner success pay and stake that in of that will small So otherwise opposed well more have practices have lower as this what's that, how operations sort might may bypass a utilized. and understand that

no type off So studies. the community within frankly, paper quickly, proactive that case you that it, white names start we be But will relatively with, also in quite call happens there.

in those You conferences, to work that's operator of results. find all to present together you through, process. with communicate the ways at can think But technical

John Daniel

more international you're where about? with on the optimism the the to I that called Norway East. you penetration where the market and excited relative guess, most But say respect you've lease out you -- Argentina would side, then Okay. got And also the and -- what's Middle -- then if the,

Ryan Hummer

Yes.

casing the One to the I'd getting regions of as the We've where our we're our called through construction that twofold. to buoyancy have well menu had expanding trial technology. the where is that moved portfolio near AirLock choose out free system. through technology be country that going East. well asset the far success around say can owners into to Middle folks point by it's in the relatively that of needs is process think various sponsor there term, in using the across product And As really word that the I a sort

side, I to the more little think other about and on some offshore call on the respect talked last it bit applications. of shallow-water we the with really a

been most with of conducted tubing operations conveyance our device have Historically, the coiled frac assembly. as for our initiation

have up to coiled prefer access that jobs we've this work of the for or tubing. some opens operators on either have tubing done pipe, drill don't a which the that year, With use number been coiled additional just opportunity to not

So our forward. water, take that of broader the a this Sea that point into operations and set we'll their technology experience at North had applications there's using going shallow in forward

John Daniel

out the appreciate luck thoughtful I answers. there, guys. Okay. Good

Ryan Hummer

you All right. to John. Look forward seeing Thanks, next week.

John Daniel

Yes, sir.

Operator

comes question Tower next Water from Jeff Our of Robertson Research.

Jeffrey Robertson

A on question well complexity.

complex operators more margin? and to opportunities demand getting seeing innovate Where wells couple of to of operators' laterals. And product the impact see you next new solve that in does are trying drill years? As and over terms to NCS longer problems you solutions

Ryan Hummer

Yes, absolutely. Great question.

or I more extended the laterals, a move wells of true to the So of penetration industry for One percentage think will market think of I that for reach couple improve a higher construction we of of is portfolio of that. casing suite well answers piece buoyancy more bear technology with broadly. the our proprietary those that NCS, And bring number customers. can a can we within systems with leverage as full to as

laterals. team, the sleeve tool the and really deeper operations the experience of field at more working fracturing our combination for depth, are sleeves comfortable with to getting operating think so and this X.X other of and The and and that comfort X into miles piece existing companies to the that kind I more technology with in running tandem systems those service have is we is other shifting service customers of miles, sleeves beyond in continue get but technology,

for continues it market So us. that to expand

called We've that. really precision frac, industry. dissolvable you more lateral, had NCS, a good new trials not call really specific we all pressure with intended see during and that's would to frac design the the and toe. establish for the of But dissolvable to the the treating that and seal That's plug provide other new high-performance about their us the what for repeat talked pressure bit like we PurpleReign. bringing The necessarily solution heel plug that's good the piece that's get the put out through that really way a -- at a

good but field on. start be had feel it that then trial still we've We're composites deploy taking early who stage, able run we customers that as in already success So to technology, it confident existing we'll take new with our but customers to well.

those quickly develop and able So our I think in customer onboard benefit solutions to general, right, challenges them we be the are the quickly complexity trend them towards strategy engineer new the tend extent voice customers. that of we out will the way longer to and arise to the and laterals, get positioned to attain through that higher the product team, will to us solutions

Jeffrey Robertson

a your you mentioned As CCS remarks, follow-up, wells. capture and prepared COX geothermal injection in well or carbon in

projects. some pursuing customers, customers those that are types where years probably think your of goes next of think of talk stack? you lot the existing terms of diversifying in I your of revenue Can NCS' you over couple a about

Ryan Hummer

in we Yes, really recent absolutely. most twofold. was The application that a for tracer quarter And it's had application. geothermal the

they're environments. enhanced guess, now, that they're especially rock, into very and right early high So the days. to super lot And call, or geothermal a you'd geothermal these fracture I first of hot up or stability exhibited temperature developments tracers very looking what

required tool that. is tracer be in great as projects would they progress the that for them learnings developers a of diagnostics lot a by those there's and So

system The respect and sleeves service other our into piece to a of for we technology, our X-inch tools. we with the development plays that the that spoke to systems, fracturing that bit developed

flow including rate In geothermal applications, be certain can other in very and important. CCUS,

around business and for initiative geothermal, systems applications. grow use [indiscernible] to also size but an the for case have the both other offerings fracturing larger we up for capabilities temperature operations, high-temperature the take as So our also

I fracturing those more areas. think see systems into you'll our expand business

days. with customers currently technology of side, On that with think the really do it's exploring well can as to be with several able and space. will The COX what's believe what of rates are zones the they're accept storage. vertical move Again, prospective areas interesting that have And have at you a to number frac which of doing the identified isolate long-term what and CCUS early you that individual is ship And candidates which ones storage reservoir those storage drill reservoirs, the our zones long-term solution. to highest individual be a process, you as those test for close our find customers they're provide good in I it's zones may up for can carbon. integrity they the can that

example look -- So I customers think we'll as be out and of of customers, but applications. that certainly just ESG our readily And great to proving oilfield those technology their in the will early applying taking the scores, their part over a established days are time. And operators technology as overall carbon used pretty on participate another to the improve footprint the assets. carbon capture new certainly it is

Operator

Ryan I'd further Hummer this like turn I'm to closing at remarks. to showing time. questions no it back for

Ryan Hummer

especially to thank our everyone long-term our our shareholders, analysts team from on tremendous including work you, On dedication Thank we'd strategy. Precision management Board, at here employees. behalf and like we truly today, implementation call the and our the appreciate and of Okay. NCS benefit of team our as the Didi. and of Repeat I

America. ever-increasing whereby outside this of to and with in value. customers, provide leaning our pressures tangible increasingly into calls, depths, and on can where customers benefits differentiate into quality, and engaged challenging or temperatures we North to offshore We're mentioned we demanding them our unique I've prior projects we're and to through succeed enable delivering product service onshore As technically environments, also

a I'm an NCS on It's that our only our we to have through these the achieve and variety customers. team of those and of aligned capabilities of to our grateful confidently challenges, across in wide roles can people take amazing objectives such

We appreciate we Multistage, next look NCS our call. in everyone's talking and on earnings quarterly to again interest forward to you

Operator

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

NCS Multistage (NCSM) 31 Oct 242024 Q3 Earnings call transcript