NCS Multistage Holdings, Inc. (NCSM) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call indicates strong financial performance with a 13% revenue increase and improved EBITDA margins. Despite challenges, the company shows operational efficiency and a positive cash position. The Q&A section highlights promising market opportunities and successful integration of ResMetrics. The guidance remains optimistic, with growth in deepwater markets and enhanced recovery technologies. Overall, the sentiment is positive, likely leading to a stock price increase in the next two weeks.
Key Financial Performance
Revenue $183.6 million for 2025, a 13% increase compared to 2024. Excluding ResMetrics' contribution, revenue increased by 10%. The growth was driven by improvements in the U.S., Canada, and international markets despite a challenging industry environment.
Adjusted EBITDA $26.7 million for 2025, a 20% increase compared to $22.3 million in 2024. The adjusted EBITDA margin expanded to 14.5% from 13.7%. This growth outpaced revenue growth, highlighting operational efficiency.
Free Cash Flow $18.9 million after distributions to noncontrolling interest for 2025, representing over 70% adjusted EBITDA to free cash flow conversion. This reflects the impact of the asset-light model.
Net Income $23.7 million for 2025, an improvement from $6.6 million in 2024. This includes a net positive impact of $11.5 million related to the release of deferred tax valuation allowances, demonstrating confidence in future profitability.
Adjusted Gross Margin 41% for 2025, a slight decline of approximately 40 basis points compared to 2024. Despite favorable contributions from ResMetrics, the decline was due to the mix of international tracer diagnostic jobs and fracturing system service activity.
SG&A Expense $58.8 million for 2025, an increase of $1.0 million compared to 2024. The increase was driven by ResMetrics' contribution and higher share-based compensation expense, partially offset by lower professional service fees and R&D expenses.
Cash Position $36.7 million in cash and $7.6 million in total debt as of December 31, 2025, resulting in a net positive cash position of $29.1 million. Total liquidity, including the undrawn ABL facility, was approximately $61 million.
Fourth Quarter Revenue $50.6 million, a 13% increase compared to the fourth quarter of 2024. Growth was driven by a 69% increase in the U.S., a 5% increase internationally, and a 7% decline in Canada due to market headwinds.
Fourth Quarter Adjusted EBITDA $9.2 million, an increase from $8.2 million in the fourth quarter of 2024. The adjusted EBITDA margin exceeded 18%, driven by improved fracturing system sales and higher plug revenue.
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Operating Highlights
ResMetrics acquisition: Enhanced global position in tracer diagnostics space and integrated operations under ResMetrics commercial brand in the U.S.
New product introductions: First use of fracturing systems technology for SAGD project in Canada and Ratek Proppex sliding sleeve system for deepwater Gulf of America.
Innovative solutions: Introduced Terrus AICV system in Canada and expanded tracer diagnostic solutions like rapid trace and Lume8 multi-day composite samplers.
Geographic expansion: Growth in U.S., Canada, and international markets, including first well in the Middle East and new customers in the North Sea.
New market penetration: Sales of precision frac plugs in the Middle East and expansion into technically demanding environments like the North Sea and Alaska.
Financial performance: Achieved 13% revenue growth year-over-year, with adjusted EBITDA increasing by 20% to $26.7 million.
Operational integration: Integrated ResMetrics operations, upgraded systems, and centralized manufacturing and lab operations in Tulsa.
Core strategies: Focused on building market positions, capitalizing on high-margin growth opportunities, and commercializing innovative solutions.
Financial flexibility: Maintained a net cash position of $29 million and converted over 70% of adjusted EBITDA to free cash flow.
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Risk or Challenges
Market Environment Challenges: The company expects flat to lower overall customer activity in North America for 2026 compared to 2025, with improvements in international markets likely weighted towards the back half of the year. This indicates potential revenue and operational challenges in the near term.
Canadian Market Headwinds: The company anticipates lower revenue in Canada year-over-year due to a lower total rig count and specific customer consolidation, which could reduce pro forma activity levels.
Trade Environment Volatility: The financial guidance does not incorporate potential impacts from the volatile trade environment, including new or retaliatory tariffs involving the U.S., Canada, and Mexico, which could affect operations and costs.
Middle East Conflict Risks: The guidance excludes potential impacts of the current conflict in the Middle East, which could disrupt operations in the region or result in sustained increases in commodity prices.
Integration and Synergy Risks: While the integration of ResMetrics is progressing, there are ongoing risks related to achieving the anticipated cost savings and revenue synergies, particularly as operational and manufacturing integration is still underway.
Seasonality and Cash Flow Timing: The company expects the achievement of annual adjusted EBITDA guidance to be weighted towards the second half of the year, with free cash flow also weighted towards the end of the year, which could pose cash flow management challenges.
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Guidance & Outlook
Revenue Growth: The company expects full-year revenue for 2026 to range from $184 million to $194 million, with growth primarily driven by the U.S. and international markets. Canadian revenue is expected to decline due to lower rig counts and customer consolidation.
Adjusted EBITDA: Full-year adjusted EBITDA for 2026 is projected to be between $26 million and $29 million. Incremental adjusted EBITDA margins are expected to range from 25% to 35% over time.
Free Cash Flow: Free cash flow after distributions to the joint venture partner is expected to range from $12 million to $16 million in 2026, with a conversion rate exceeding 50% of adjusted EBITDA.
Capital Expenditures: Gross capital expenditures for 2026 are expected to be between $1.5 million and $2 million.
Market Trends: Customer activity in North America is expected to be flat to lower in 2026, while international markets, particularly the Middle East, are anticipated to see increased activity, especially in the latter half of the year.
Product and Market Expansion: The company plans to drive revenue growth through new product adoption, international expansion, and market share gains, particularly at Repeat Precision.
Operational Efficiency: Strategic actions are planned to expand gross margins by improving efficiencies and optimizing product and service costs.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:Is there potential for some of the revenues weighted towards the back half of the year to be moved up?
A:The CEO explained that the revenue profile will likely continue to be weighted towards the back half of the year due to seasonality and market factors. The acquisition of ResMetrics and market share gains in Canada may mitigate this slightly, but the pattern of earnings and cash flow being concentrated in the latter half of the year is expected to persist.
Q:Is it too early to discuss cross-selling potential in the Middle East with the ResMetrics transaction?
A:The CEO stated that while there are some benefits internationally, most cross-selling benefits have been seen in North America. The international work with ResMetrics is under long-term contracts, and revenue cross-selling outside North America will take more time to develop.
Q:What updates are there on the pipeline in the North Sea as the company expands deepwater and other capabilities?
A:The CEO highlighted the success in the North Sea, with work done for 7 customers in 2025 and plans to add 2 more customers in the Dutch sector. The company is leveraging its technology to expand into shallow water offshore markets and eventually into mid and deeper waters.
Q:What are the medium to long-term new market opportunities the company might pursue?
A:The CEO discussed several opportunities, including deepwater markets, high-temperature applications, thermal oil developments in Canada, enhanced geothermal systems, and enhanced recovery technologies like Terrus AICV. These initiatives are in early stages and will take time to scale.
Q:How does the ResMetrics integration play into enhanced recovery and production?
A:The CEO explained that ResMetrics has opened new opportunities in the production space, particularly in waterflood projects. The Canadian team has been successful in participating in projects that were previously less competitive due to new lab and chemical deployment techniques from ResMetrics.
Q:Review of Unclear Management Responses
A:No questions were identified where management avoided giving a direct answer or lacked clarity in their responses.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AICV system
Alaska technology
America core
Argentina Middle
CEO NCS
Mr
ResMetrics decline
SAGD
SGA
acquisition
adoption
asset
combination
compensation expense
contribution ResMetrics
conversion
cost award
fee
flow cash
geography
income timing
increase Canada
installation
integration ResMetrics
interest cash
light model
margin decline
market product
principle
promise
rate
release tax
safety
service offering
service production
share compensation
share release
system technology
tax valuation
timing royalty
use
valuation allowance
vision
NCSM Transcript
NCS Multistage Holdings, Inc. (NCSM) Q4 2025 Earnings Call Transcript
Positive3-5
The earnings call indicates strong financial performance with a 13% revenue increase and improved EBITDA margins. Despite challenges, the company shows operational efficiency and a positive cash position. The Q&A section highlights promising market opportunities and successful integration of ResMetrics. The guidance remains optimistic, with growth in deepwater markets and enhanced recovery technologies. Overall, the sentiment is positive, likely leading to a stock price increase in the next two weeks.
NCS Multistage Holdings, Inc. (NCSM) Q3 2025 Earnings Call Transcript
Positive10-30
The earnings call revealed strong financial performance, with significant revenue and EBITDA growth, particularly in the U.S. market. The successful integration of ResMetrix and promising opportunities in the Middle East and North Sea further enhance prospects. Despite some concerns about Canadian rig counts, the company plans to defend margins and grow market share. Shareholder returns are supported by a positive net cash position. The Q&A session provided additional confidence in strategic execution and market expansion, justifying a positive outlook for stock price movement.
NCS Multistage Holdings, Inc. (NCSM) Q2 2025 Earnings Call Transcript
Positive8-1
The earnings call reflects strong financial performance with revenue exceeding expectations and improved EBITDA. Q2 revenue was the highest since 2019, and net income turned positive. Despite a slight decline in margins, cost management improved. The Q&A highlighted growth opportunities, particularly in Canada and international markets, and management's cautious optimism. Although there was some lack of clarity in guidance tightening, the overall sentiment is positive, supported by new customer wins and strategic focus on synergies and international expansion.
NCS Multistage at Emerging Growth Conference 82: Strategic Expansion Amid Challenges
Neutral5-21
NCSM Report
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