NCS Multistage (NCSM) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue reached $44.0 million, up 15% year-over-year, with growth across U.S., Canada, and international markets; net income was $4.1 million ($1.60 per diluted share).

• For the first nine months of 2024, revenue was $117.6 million–$118 million (+10% YoY), with net income of $3.1 million ($1.21 per diluted share).

• International revenue for the first nine months was $12 million, up 124% YoY, already surpassing full-year 2023 and comprising 10% of total revenue.

• Business optimization and cost-saving initiatives from 2023 continue to benefit 2024 results, with SG&A expenses for the first nine months lower than the prior year.

• The company operates as a single reportable segment, focusing on engineered products and services for oil and gas well construction and completions.

Financial highlights

• Q3 2024 adjusted gross margin was 42%, up from 41% in Q3 2023; adjusted EBITDA was $7.1 million (+$0.3 million YoY), margin at 16%.

• Q3 2024 product sales were $31.7 million (+16.1% YoY); services revenue was $12.3 million (+12.2%).

• Cash and cash equivalents at September 30, 2024 were $15.3 million; total debt was $8.6 million, all finance leases.

• Free cash flow less distributions to non-controlling interest for the first nine months was $0.4 million, up $3.3 million YoY.

• Net working capital at September 30, 2024 was $64.1 million, up from $56.3 million at year-end 2023.

Outlook and guidance

• Q4 2024 revenue expected between $38 million–$42 million; adjusted gross margin 40%–42%; adjusted EBITDA: $4.0–$6.5 million.

• Full-year 2024 revenue guidance raised to $155.5 million–$159.5 million (+11% YoY at midpoint); adjusted EBITDA guidance increased to $18 million–$20.5 million (+49% YoY at midpoint).

• 2024 free cash flow expected at $6 million–$10 million; year-end cash position projected to exceed $20 million.

• Management expects Q4 revenue to decline sequentially 5–15% due to seasonality but remain above prior year.

• Capital expenditures for 2024 expected at $1.2–$1.7 million, focused on equipment upgrades and technology.