Ncs Multistage Holdings ((NCSM)) has held its Q1 earnings call. Read on for the main highlights of the call.
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NCS Multistage Holdings recently held its earnings call, revealing a strong first quarter performance marked by record revenue and substantial growth in key segments such as Canada and international markets. Despite these achievements, the company faces challenges, including a decline in US revenue, increased expenses, and tariff impacts, which contribute to a cautious outlook for the remainder of the year amidst broader market uncertainties.
Record-Breaking Revenue
The first quarter of 2025 was a landmark period for NCS Multistage, with revenue reaching $50 million, surpassing the high end of the guided range by $4 million. This achievement marks the highest quarterly revenue for the company since Q1 2020, showcasing its robust performance in the face of market challenges.
Strong Canadian Performance
Canada emerged as a standout performer, with Q1 revenue climbing to $38 million, a 19% increase compared to Q1 2024. This growth significantly outpaced the 3% rise in the average rig count, highlighting the company’s strong foothold in the Canadian market.
International and Offshore Growth
International revenue saw a remarkable 34% increase, driven by significant contributions from regions such as the Middle East and the North Sea. This expansion underscores NCS Multistage’s successful efforts in diversifying its market presence beyond North America.
Innovative Solutions
The company introduced several innovative products, including a 7-inch sliding sleeve for Alaska, enhanced recovery systems in Argentina, and the Lumen8 multi-day automated sampler, demonstrating its commitment to technological advancement and customer-centric solutions.
Improved Financial Metrics
NCS Multistage reported an adjusted EBITDA of $8.2 million, exceeding the estimated range and showing a year-over-year improvement of $2.1 million. This financial strength reflects the company’s effective cost management and operational efficiency.
US Revenue Decline
Despite strong performances in other regions, US revenue declined by 6%, partially offsetting the growth achieved elsewhere. This decline highlights the challenges faced in the US market, which the company aims to address moving forward.
Tariff Challenges
The company acknowledged the impact of tariffs on steel imports and products from China, which have influenced its guidance. NCS Multistage is actively pursuing initiatives to mitigate these cost increases and maintain its competitive edge.
Increased Expenses
Selling, general, and administrative costs rose by $2.4 million, attributed to higher incentive bonus accruals and stock-based compensation. This increase reflects the company’s investment in its workforce and strategic initiatives.
Cash Flow Challenges
Free cash flow, less distributions to non-controlling interest, resulted in a cash use of $2.1 million for Q1. This challenge emphasizes the need for careful cash management as the company navigates market uncertainties.
Market Uncertainty
NCS Multistage is operating in an environment of heightened uncertainty related to trade, economic growth, and geopolitical factors. These uncertainties are affecting the company’s market outlook and strategic planning.
Forward-Looking Guidance
Looking ahead, NCS Multistage projects Q2 2025 revenues between $26 million and $29 million, with a gross margin of 37% to 39% and adjusted EBITDA ranging from negative $2 million to break-even. For the full year 2025, the company anticipates revenue of $165 million to $175 million and adjusted EBITDA of $20 million to $24 million, reflecting cautious optimism amid market challenges.
In conclusion, NCS Multistage’s earnings call highlighted a strong start to 2025 with record revenue and growth in key markets. However, challenges such as US revenue decline, increased expenses, and market uncertainties temper the outlook. The company’s forward-looking guidance reflects a balanced approach, aiming to sustain growth while navigating external pressures.