Ncs Multistage Holdings ((NCSM)) has held its Q4 earnings call. Read on for the main highlights of the call.
NCS Multistage Holdings recently held its earnings call, showcasing a robust performance throughout 2024. The sentiment was largely positive, driven by significant international revenue growth, improved financial metrics, and successful new product launches. However, the company also faces challenges, particularly concerning currency impacts and increased expenses projected for 2025.
International Revenue Growth
NCS Multistage Holdings achieved a milestone in 2024 by doubling its international revenue from 5% to 10% of total revenue. This impressive growth contributed to a 250 basis point improvement in the adjusted gross margin, marking a significant achievement for the company outside of North America.
Record Year-End Financial Position
The company concluded 2024 with a strong financial position, boasting a net cash position of nearly $18 million and generating approximately $12 million in free cash flow. This reflects 54% of the adjusted EBITDA, underscoring the company’s financial health and operational efficiency.
Revenue Growth Across All Regions
NCS Multistage reported a 20% increase in fourth-quarter revenues compared to the previous year. Notably, international revenue surged by 280%, while Canada and the U.S. saw increases of 20% and 18%, respectively, highlighting the company’s broad-based growth.
Innovative Product Development
The introduction of new technologies, such as the dissolvable frac plug and stage saver composite plug, has expanded NCS Multistage’s offerings. These innovations are designed to address customer challenges in North America, showcasing the company’s commitment to technological advancement.
Strong Adjusted EBITDA Growth
The company’s adjusted EBITDA for the fourth quarter rose to $8.2 million, a significant increase from $2.5 million in the same period in 2023. For the full year, adjusted EBITDA improved to $22.3 million from $11.9 million in 2023, reflecting strong operational performance.
Currency Exchange Impact
The strengthening of the U.S. dollar against the Canadian dollar is anticipated to negatively impact NCS Multistage’s revenue by approximately $4 million and adjusted EBITDA by $2.5 million to $3 million in 2025, posing a challenge for the upcoming year.
Moderate U.S. Market Outlook
The outlook for the U.S. market in 2025 is expected to be flat to down, which could potentially affect NCS Multistage’s overall growth, as customer activity is projected to remain stable or decrease.
Increased SG&A Expenses
The company experienced a $1.8 million increase in selling, general, and administrative expenses for the fourth quarter compared to the previous year. This rise was primarily due to higher incentive bonuses and share-based compensation.
Forward-Looking Guidance
Looking ahead, NCS Multistage provided robust guidance for 2025, despite acknowledging potential challenges such as currency fluctuations and trade actions. The company expects revenue to range from $165 million to $175 million, with adjusted EBITDA between $20 million and $23 million. For Q1 2025, NCS forecasts revenues between $42 million and $46 million, with an adjusted gross margin of 39% to 42%, and adjusted EBITDA between $4.5 million and $6.5 million. Additionally, NCS plans to generate free cash flow between $7 million and $10 million after distributions, supported by a strong cash position of $25.9 million at year-end 2024.
In summary, NCS Multistage Holdings has delivered a strong performance in 2024, marked by significant international revenue growth and improved financial metrics. While challenges such as currency impacts and increased expenses loom for 2025, the company’s forward-looking guidance remains optimistic, with expectations of continued growth and innovation.