NCSM - Earnings call transcript Q4 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 Q4 and Full Year 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, sir.

Michael Morrison

thank Full joining Year and Fourth NCS Michelle, and Quarter XXXX you, you the for Multistage Thank Conference Call.

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

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

Ryan Hummer

a strategies. follow solutions early objectives partner and enable quarter our and designed vision NCS' and XXXX financial customers' value service unconventional diverse vision and our product resource and business for welcome and reliably reviewing cohesive covering Mike, offering we the discussion including to development assets. East for to reliable the recognized and expertise. customers in accomplishments our more core North unconventional XXXX. of year strategies a in in to and XXXX outline our we're in our investors, in full markets you, strategies, enabling as like practice, technology-driven conventional to pursue will our high-growth this Middle fourth employees where our conference Thank through globally Argentina begin the technologies developments their In XXXX North strategic service through and and innovator, call. our be alignment geographies of maximize is analysts This earnings the results portfolio trusted vision bold deploying and more markets quarter. NCS' the by I'll Mike also complementary a joining certain product and in America, I'll successfully techniques. Sea, and applies across mature unconventional emerging the with

We in are collaborating innovative and for and open geothermal. services solutions with SAGD, technically products demanding to customers our for deepwater markets new environments, including our

each, how As principles. X review enabling our demonstrate core stakeholders. are we've are have supported by I'll strategies recent discussed to value guiding long-term we progress before, that we X including for creation

this XXXX We're increase operating core to systems financial build and notable and late area production when of success, year leading that liquids-rich first readiness advanced in plans North we've we've disclosed customer entry for deepwater comparable a the in further systems proven operational the returns development single-point service enhance for also Sea deployment NCS this their the in efficiency customer a systems in of our our portfolio is critical exceed in was offering. in in of differentiated achieve product and This record utilizing our pursuit technology track extending performance technology area to the optimization the our plug-and-perf formation and to Montney fracturing collaboratively the in of our completions advancing completions. for with base use XXXX our strategy includes customer market came success and strengthening The comprehensive that wells positions. using fracturing A of threaded our opportunity globally. applications. With medium-term pipe Canada market, upon expanded tools. in also to our working capital long-standing use continued program, fracturing

strategy international and speak over represent on and in to core We've that capitalizing years we made international East. in position investments the I'll opportunities. that second activity the Sea, including North offshore several to for areas strategic markets is the The growth long-term Middle ourselves believe last Argentina NCS, unconventional

America, XXXX doubling total Our in year we XX% achieved to of ever our of outside our themselves for as results revenue from the XXXX. speak in prior highest revenue X% in North

margin Our to international as gross improvement our point growth also in adjusted to basis compared XXX XXXX. XXXX a in support helped

customer Precision, receipt principles to Middle to customer key our complex core market And expand year agreement at a during we've in final a North commercial that underpin saver the simul-frac the continues several operations, frac exciting purchase plug long-term commercialized strategy. accelerate products customers of our our was plug introduced for This the of in composite features dissolvable with issues for well encounter in We X SAGD to our new successful achievements. can with enhanced mitigate to of AirLock is Our us which Repeat our use and strategy including technologies, America. I'll a now challenges. commercialize very our the stage capabilities significant served with innovative to We systems speak that which guiding buoyancy high-value and East. frac that construction the and system, performance Canada. solutions casing

to flexibility. The financial first is maximize

position be to model cash validated million business we an $XX year-end net as nearly Our bolstered our to with revolver. continues undrawn at

cash million The cash free cash year-over-year our million noncontrolling in flow adjusted EBITDA, we interest. in $XX in XXXX, of flow to growth. our was XX% During generated was XX% especially million. on $XX flow approximately million XXXX distributions March $XX our cash free X, material of $XX market flow after free million and reflecting distributions XX% $XX which considering revenue conversion, free approximately represents our in The approximately in after capitalization

the promise. uphold to is principle guiding second Our

commitments and safety a we other how is promise, our vendors of actions workflow, certification customers, quality, to our programs, And at to safety are related our quality a we it technology, also the impressive conduct We values stakeholders. company and environment. facility, continuous our adopted focus and business, and in employee This added during enhanced took areas in stakeholders a embedded key to several reflecting new we the improved the health, to development for recognition company as our we commitment Our employees, which internal XXXX, record. speaks a already represents process our the product a make NCS.

our and we each service XXXX, markets, the employee including We'll for drive of straightforward Our more new will will improve offerings review in quarter and obtain in for first to workplace work commercial our trials internationally. cash field free U.S. improve continuously of now activity We entered to and the to engagement ensure quarter our generate the grow and goals are aim and for aim excess to so further our revenue underlying market of recently for the and safety. and effective, be primary we our our markets. guidance also are can technology Canada, collaboration continue XXXX. flow. Mike product introductions processes We'll and fourth and for and efficient results with XXXX In strategy. success in our we long-term new aligned to the

Michael Morrison

Thank you, Ryan.

increase yesterday's All with our of the the regions XXX%, last earnings by fourth reported by compared up increase U.S. fourth XX% to and our international year-over-year year. were a by quarter As in to contributed XX% release, quarter million, Canada revenues up up $XX.X XX%.

international, did Our of and Canada, modest the the a offset partially we normal revenues the increased in slight increases with which a experience in XXXX. by not positive Canada fourth were X% customer decline in In the slowdown activity, early quarter for highest holiday sequentially year and by is indicator U.S.

cost sales, to to was XX% total $XX.X adjusted same increase for of excluding up in revenues. depreciation defined revenues in less our international in adjusted margin profit, improvement gross margin and fourth million was expense, of part in quarter, gross XX%, XXXX. adjusted the gross compared higher-margin an representing total Our period as the This due of an amortization

to million, or million. full All XX% high compared XXXX revenue all-time $XX regions Our an revenues reaching $XXX.X for of million the with were contributed improvement this international of year an growth of to XXXX. over $XX.X

XX% margin to to Our for year. XXXX improved adjusted XX% compared gross last

changes. were selling, cash the compared $XX.X $X.X period due million year from to last to as administrative compensation costs increased our our settled improved expense for performance million fourth stock the increased we as general well with resulting which accruals quarter, our up share-based same price associated and recognize Our as bonus incentive expense awards,

were year full SG&A XXXX, increase of of the costs last million year. compared million, $XX.X to $X.X our For an

improved quarter increase an quarter XXXX, we year of of in the royalty to X-quarter the Previously, in full offset by cost in savings lag. bonus our received the the $X.X partially compensation we from the intellectual driven and in in income. was was our income implemented on property. year, accruals incentive increase of favorable period fourth income income licenses of same XXXX. Other by royalty process recognizing the impact for prior royalty the million share-based the initiatives the For a period primarily effectively XXXX, cash for recognized changed In compared

when these in rather royalties increase accrue to than the royalty we earned received. Given began when for income,

$X income is to the our As we a quarter. future quarter result million historical first our of elevated XXXX, periods change, to quarter compared royalty royalty income with expectations. this fourth per normalize Beginning both and approximately expect to

was $X.X diluted quarter of year million an of the earnings improvement adjusting year's benefit per ago. noncash or legal net $X.XX, for fourth for Our the income after quarter settlement to X fourth share last the

XXXX share to in increase for quarter improvement an XXXX. Our $X.XX, net for per full fourth net was $X.X $X.X diluted of compared the income of or EBITDA year an the over million, XXXX. Adjusted million of $X.X same $X.X in the for was earnings the period million million loss

full significant XXXX. the in $XX.X reported of adjusted our million, year the XXXX, $XX.X a EBITDA improvement was million For over

base of sheet. approximately facility. XX, total $XX.X of total million turning balance availability was which million, finance in under cash a million, of positive resulting $XX.X and On the cash $XX.X in Now $XX in including debt million, entirely of position borrowing we revolving obligations, and to net $X.X consisted undrawn resulting had under ABL cash lease our facility credit The our million. liquidity December

Turning first now Currently consistent the total points in with revenue first the quarter quarter of million million, of for the to $XX being quarter. guidance range midpoint few expect XXXX. a to $XX first the of

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

gross a at the quarter XXXX. our to of XX%, margin be expect and compared adjusted between the We midpoint first XX% to modest improvement

year and expect $X.X to XXXX million guidance over We million. With between and quarter full to and EBITDA back million to depreciation million closing amortization I'll approximately for first that, expense $X.X our it $X.X remarks. and our be be provide $X.X adjusted to Ryan to our hand

Ryan Hummer

you, Mike. Thank

full increase the full to include $XX expect overall the year States, $XXX as markets, our range for Our Argentina, our XXXX guidance is the Middle expectation East. follows: million down as compared development year current to in the United year is unconventional international to of a currently XXXX and slight in Our to for revenue for to We $XXX in activity and to customer Canada Sea core both and in be which million full flat adjusted million. in North EBITDA range million $XX from XXXX

Canada, dollar by that of million Canadian revenue move the to adjusted negatively in way balanced example, generated quarter accelerated of with is U.S. XXXX currently By to in our from international XXXX revenue XXXX. lower expect and in Canada would $X.X dollars. relative in the and X.XX impact We U.S. revenue We which in adjusted markets. I'll the rate XXXX, of U.S. note $X.XX. for expect $X guidance X% each a to of both the FX be growth $X reduction in in the movements of dollar, this growth NCS to EBITDA. our impacted of strengthening and USD fourth to and The are translated million these contributions to million EBITDA net year-over-year reflected the dollar conversion approximately revenue

any incorporate involving new U.S., enacted not impacts retaliatory Our trade actions, threatened including tariffs or financial does of the Mexico. and imposition from meaningful guidance Canada the

engaged in to We their evolving increases and on of related we the imposed enacted. for to on leading believe of and will raw through mitigate customers least in as partially We've actively able are the mitigate are already tariffs landscape impact casing tariffs by be implemented tubulars these to will currently actions, it a wells. at planning China see our plans as if relates potential pass partially the larger to costs U.S. these to monitoring material increased and other the their partially steel purchases actions impact and

guidance discussed in adjusted As other our reduction impacting forecasted overall year-over-year EBITDA also income. earlier, is an Mike

expenditures. capital to Turning

to years, for after will will million would of we business be we the to venture the the gross free also that expect of our our our consistent guidance We be and robust of free seasonality and adjusted the our capital the distributions our Due sheet investment strengthening $X year $X.X end annual achievement be balance with to us the weighted expect half of second weighted year $XX joint to flow cash range the our to $X million, million between of expenditures towards prior and strategic and to partner opportunities. million, EBITDA pursue cash anticipate that flow and positioning year. further

the brief XXXX. NCS I'm our market a our adjusted revenue, plan. couple what on environment, a with team flow close grew proud very that free We we benefits in expect I'll at cash challenging Q&A, to turning EBITDA as in delivering strategic the execute of of we accomplished Before comments. and

We success growth expect markets product portfolio in customer NCS to and ensure growth position from market international position and continue ourselves for investments multiyear our to in to new service made efforts our and for to benefit to segments. position

positioning finally, million. and people sheet with the infrastructure have nearly maintain we ending $XX our balance operating focus We a of strong with cash controlling liquidity further the growth, us entered revenue we resulting support XXXX balance expenses, and place in leverage. And on a operating from benefit position, XXXX to to and

add our cash that enhancing We any generating that, balance With questions. expect in by we'll cash again XXXX, financial flow and free positive strategic further flexibility. to to welcome

Operator

Storms of [Operator question Dave line Instructions] going is Stonegate. Our come first the to with from

David Joseph Storms

the think to of try kind a Is we to in season I that should than to Canada might be last year. kind into on there forward maybe aware sense that Canada? in of QX know wanted holiday mentioned And was other bit spring early any maybe Just a indication variance of any revenues you of expected. Do breakup for into get pull be XXXX? a the more a year? going cadence of seasonal robust you of had the

Ryan Hummer

big I stronger start we kind an the moving that off picture mimic heading speak that part, in I'll Maybe Mike other week expect it's XXXX of breakup. to in you XXXX. we right seasonality years. Then of specifically mentioned We're that first to into would in impacts the we got for than most in of that Canada, think in would what we are environment first a maybe January, strong in right where now saw into

the Southern and tailing of Saskatchewan off. Alberta activity is in Some already

bans got place. going You've road into

there of in However, count rig northern is some for more in time the holding the the areas being.

conditions expect that a favorable to pretty throughout did operations. a with conditions this not as respect at being I water point drought the for pretty the weather Operating the So very potential shortages, and I'd point, into year we'll second move were condition through materialize out typical the standpoint. will say we about ended quarter. favorable came We the concerned up from seasonality year. Canadian year XXXX which

to pick have X, up So move out. of see to and last activity year, in just what predictable. March June, we'll how delivers Typically, lower different that got start breakup we to it's It's spring just front. Mother just we've every with X the to in not do and start but see on Nature weeks here plays again deal

David Joseph Storms

with expand Is kind seemed like of there to the might anything helpful. that due sounds Consolidated international maybe in very be the mix charge of was just that increase should margin we leading expansion? follow-up really one here It aware then driving And there. for else to be really That's year-over-year. Understood. me. mostly margin

Ryan Hummer

Yes.

it. XXXX, So there with certainly are to respect The in the to really I was largest. international think the growth X expansion components

just operating The overall of second was kind leverage.

take the highly We of cost did chain the can we of fixed that actions X And side variable reduction grow. cost So on component, in leverage that's cost XXXX. the side. of do XX%. we on costs last quarters have as sales supply then have a And while ledger the grow third did of but some the revenue we some of sales we XXXX, really throughout kind we

some kind of recognized So benefit had year which in full of year-over-year we we those, XXXX.

and pull contributed all increase. together, So of point to those that you XXX that basis

So as to we look line. continue grow to XXXX, we do expect the to top

has the However, FX impact Canada bit weight. more in a

expect FX driven business compression margin gross some where So leverage of grow, we the see year-over-year, flat now, by offset to we be some benefits to continued we're environment. margin the right by do through general forecasting as just relatively operating

Operator

And line Daniel Daniel Energy our next with John Partners. from the question comes of

John Daniel

you you small your businesses tech-type continue to as are there I'm would related curious, that at be build just those are And anything to Ryan, looking cash, actively along any business? plug-ins good little lines?

Ryan Hummer

question. Yes, John, great

short answer the multiple attributes growth, we've benefits for organic it the model, operating in of and as far multiple So to good but with front. organic Because also revenue growth business on M&A think product the would in NCS operate the geographies. apply some I really is yes, as positions lines Again, right? also we revenue same us, got leverage our of

have a grow team lot able take be So business a front and management to international we it started bring with in to of you to the have work opens Canada U.S., it M&A where can we traction in good on a as that, and might some technology the said, into potential may but markets. that it opportunities up other that

to logic operational of I'd very actively is and opportunities. certainly where and strategic have such a clear. at of very, kind business a ones for transaction. M&A it a synergies post you What that be some that combination having at looking the we would generate view we'll the the So very look attractive are expect the we and synergies fit say towards pay the reasonable in would price where be

John Daniel

Right.

then later year it. to the come today the there could anything next me that Okay. one on is that for just that market working final Got some front. on you Is early And year, you guys this R&D gives are excitement.

what elaborate pipeline? be might in Just the on

Ryan Hummer

So finishing prototypes exciting work building on most stuff to I'd the there's for to engineering going take the either is, working it us. we're some we're yes, of that's just where the obviously, of we're up to and some that, say be answer out.

I that So through are need need that far We you for we're field market kind their are to inside it kind will. they if to once some got wholly by There are internally they with looking NCS we find go right, we and that are kind myself. for made, we ahead us, areas of But some make could any NCS, get to whether partnering trial. adjustments don't we've need of the to new think want companies segments of we NCS. in products that to Those too technology to growth see to there market up back where the other drive and technologies of incorporate developed prepared the open technology remarks make. some home

Operator

And I hand Ryan to closing remarks. over back conference would the like CEO, for to Hummer,

Ryan Hummer

passion everyone our today, breadth our of our depth their and of people at to Board, our and Michelle. and and All appreciate the the behalf including we'd effort work. to and that NCS team call On the right. expertise people especially and our thank employees. Repeat Thanks, our Precision analysts management bring of shareholders, on truly I the like

our service to will and to customers continues to new successful. commercializing is excellent provide customers more our and be enable services products that team Our

challenging everyone's we're demanding you. look are earnings appreciate quarterly speaking Multistage, We next and NCS Thank again work, we our results. interest on on forward in call. to taking and We technically and delivering

Operator

you participating, concludes and disconnect. call. Everyone, may This Thank today's a now conference for have you day. great

NCS Multistage (NCSM) 11 Mar 252024 Q4 Earnings call transcript