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NCS Multistage Holdings, Inc. (NCSM)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered a clean beat: revenue $36.45M (+23% YoY) versus S&P consensus $27.6M; diluted EPS $0.34 versus consensus -$1.46; adjusted EBITDA $2.22M, above internal guidance, aided by Canada strength and product mix . Revenue and EPS estimates marked with *; Values retrieved from S&P Global.
  • Management raised full-year revenue guidance to $168–$176M ex-ResMetrics and $172–$181M including the acquisition; adjusted EBITDA nudged up to $21–$24M ex-ResMetrics and $22–$25.5M combined, but cautioned on deteriorating macro (rig counts, tariffs, potential late-2025 oversupply) .
  • Canada was the highlight (strong fracturing systems and composite plug sales), while Middle East tracer activity slowed; North Sea operations and well construction products helped offset international weakness .
  • Strategic acquisition of ResMetrics (chemical tracer diagnostics) for $5.9M cash adds >$10M TTM revenue at >30% EBITDA margins and broadens tracer offerings; expected to contribute $4–$5M revenue and $1–$1.5M adjusted EBITDA in the last five months of 2025 .
  • Balance sheet remains an asset: $25.4M cash, $7.7M debt (capital leases), ~$42.5M liquidity pre-acquisition; ~$36M liquidity post-close, still net cash >$10M; positions NCS for opportunistic M&A and resilience into H2 .

What Went Well and What Went Wrong

  • What Went Well

    • Canada outperformance: Q2 Canada revenue $17.97M (+49% YoY) with strong fracturing systems and composite plug sales; H1 Canada revenue ~$55.7M (+27% YoY), outpacing rig trends .
    • Beat on internal guidance and S&P consensus: Q2 revenue exceeded prior guided high-end by >$7M; adjusted EBITDA beat a guided range of -$2M to breakeven, landing at $2.22M .
    • Strategic expansion: ResMetrics acquisition adds complementary tracer diagnostics capabilities, limited customer overlap, and new Middle East presence (UAE, Kuwait), with >30% EBITDA margin business .

  • What Went Wrong

    • International softness: Middle East tracer diagnostics activity declined on tender timing; international revenue down 17% YoY despite offsets in North Sea and well construction products .
    • Gross margin compression: Q2 gross margin fell to 34% (adjusted 36%) from 38% (adjusted 40%) last year due to product/service mix and less high-margin tracer work .
    • Macro caution: U.S. and Canada rig counts lower YoY; tariff uncertainties and potential late-2025 oversupplied oil market temper H2 optimism and keep guidance ranges wide .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$45.00 $50.01 $36.45
Net Income ($USD Millions)$3.47 $4.06 $0.92
Diluted EPS ($)$1.32 $1.51 $0.34
Gross Margin (%)42% 42% 34%
Adjusted Gross Margin (%)43% 44% 36%
Adjusted EBITDA ($USD Millions)$8.21 $8.21 $2.22
Adjusted EBITDA Margin (%)18% 16% 6%
Cash and Equivalents ($USD Millions)$25.88 $22.997 $25.372
Total Debt ($USD Millions)$8.14 $7.62 $7.66

Q2 YoY comparison:

MetricQ2 2024Q2 2025YoY Change
Revenue ($USD Millions)$29.69 $36.45 +23%
Gross Margin (%)38% 34% -400 bps
Net Income ($USD Millions)$(3.10) $0.92 +$4.02
Diluted EPS ($)$(1.21) $0.34 +$1.55
Adjusted EBITDA ($USD Millions)$0.92 $2.22 +$1.30

Product vs Services (Q2 2025):

CategoryQ2 2024Q2 2025
Product Sales ($USD Millions)$19.02 $27.78
Services ($USD Millions)$10.67 $8.68
Total ($USD Millions)$29.69 $36.45

Geographic revenue (Q2 2025):

GeographyQ2 2024Q2 2025
United States ($USD Millions)$11.79 $13.61
Canada ($USD Millions)$12.06 $17.97
Other Countries ($USD Millions)$5.84 $4.87
Total ($USD Millions)$29.69 $36.45

KPIs (balance sheet and cash flow):

KPIQ4 2024Q2 2025
Working Capital ($USD Millions)$80.15 $87.16
Net Working Capital ($USD Millions)$56.41 $63.99
Operating Cash Flow (YTD) ($USD Millions)—$1.88
Free Cash Flow (YTD) ($USD Millions)—$1.40
FCF less NCI (YTD) ($USD Millions)—$0.50

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)FY 2025 (ex-ResMetrics)$165–$175 $168–$176 Raised
Adjusted EBITDA ($USD Millions)FY 2025 (ex-ResMetrics)$20–$24 $21–$24 Raised low-end
Free Cash Flow after NCI ($USD Millions)FY 2025 (ex-ResMetrics)$7–$11 $7–$11 Maintained
ResMetrics Revenue ($USD Millions)Aug–Dec 2025N/A$4–$5 New
ResMetrics Adjusted EBITDA ($USD Millions)Aug–Dec 2025N/A$1–$1.5 New
Combined Revenue ($USD Millions)FY 2025 (incl. ResMetrics)N/A$172–$181 New
Combined Adjusted EBITDA ($USD Millions)FY 2025 (incl. ResMetrics)N/A$22–$25.5 New
Revenue ($USD Millions)Q3 2025N/A$42–$46 New
Canada Revenue ($USD Millions)Q3 2025N/A$25–$27 New
U.S. Revenue ($USD Millions)Q3 2025N/A$12–$13 New
International Revenue ($USD Millions)Q3 2025N/A$5–$6 New
Adjusted Gross Margin (%)Q3 2025N/A40–42% New
Adjusted EBITDA ($USD Millions)Q3 2025N/A$5.5–$7.0 New
D&A ($USD Millions)Q3 2025N/A~$1.4 New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Canada operations and market positionStrong Canada portfolio; single‑point entry adoption; Canada revenue growth and margin lift Canada revenue +49% YoY; continued adoption of fracturing systems and composite plugs; H1 Canada +27% YoY Strengthening, outperformance vs rig count
International: Middle East2024 milestones; commercial purchase agreements; tracer diagnostics ramp Middle East tracer projects slowed on tenders; offset by well construction products and North Sea fracturing systems Mixed; tracer timing headwind
North Sea expansionGrowing customer base; threaded pipe deployment; expected long‑term growth Multiple successful operations; 7 customers expected in 2025 vs 5 in 2024 Positive trajectory
Tariffs/macro and rig countsFX and tariff monitoring; cautious H2 stance More cautious on H2; U.S./Canada rig counts lower YoY; potential oversupplied oil market late-2025 Deteriorating backdrop
Pricing/margin dynamics2024 margin expansion from international mix and leverage Q2 adjusted GM fell to 36% on mix; management maintains pricing discipline; fewer high‑margin tracer jobs Near‑term margin pressure
M&A and portfolio strategyActive exploration for small tech plug‑ins; return of capital discussed Closed ResMetrics acquisition; complementarity, limited overlap, UAE/Kuwait entry Executing M&A strategy
Payment terms working capital—North Sea faster pay; Middle East via local partners extends receivables; priced into project margins Neutral; managed WC implications
R&D/InnovationStageSaver, dissolvables, Lumen8, rapid trace, 7‑inch sleeve trials First successful 7‑inch sliding sleeve run; StageSaver uptake; more field trials in H2 Continuing execution

Management Commentary

  • “Our revenue and Adjusted EBITDA for the second quarter exceeded the high end of the expectations we provided in our last earnings call… year-over-year revenue improvement for the quarter of 23% outperformed industry activity levels” .
  • “We’re also excited to announce today’s acquisition of Reservoir Metrics… unaudited revenue was over $10 million with an EBITDA margin of over 30%… highly complementary with NCS’s tracer diagnostics service line” .
  • “That optimism is tempered by… continued U.S. rig count declines… potential for an oversupplied oil market… ongoing uncertainties related to tariffs and trade” .
  • CFO: “Net income for the second quarter was $0.9 million, or diluted EPS of $0.34… adjusted EBITDA was $2.2 million… total liquidity was approximately $42.5 million” .
  • CEO on North Sea: “We expect to deliver or install sleeves… for seven North Sea customers in 2025… up from five in 2024” .

Q&A Highlights

  • Revenue synergies from ResMetrics: Limited customer overlap; combined tracer revenue base $25–$30M TTM; cross‑selling expected to expand use cases over time .
  • Synergy magnitude: Operational best practices adoption could yield $1–$2M in long‑run synergies across the combined portfolio (chemical usage, instrument calibration) .
  • Macro tone: “Cautiously optimistic”—market “worse than feared” but watching OPEC+ supply and budget exhaustion risks; AECO weakness curtailing Canada gas activity; Q3 slower start expected .
  • Margins/pricing power: Q2 margin pressure mainly mix, not concessions; fewer Middle East tracer projects reduced high‑margin work; aim to maintain pricing discipline amid tariff cost pressures .
  • Working capital: North Sea fast-paying customers; Middle East via partners extends receivables; pricing adjusts for WC drag; potential receivables lengthening if Middle East grows disproportionately .

Estimates Context

MetricQ4 2024 ConsensusQ4 2024 ActualQ1 2025 ConsensusQ1 2025 ActualQ2 2025 ConsensusQ2 2025 Actual
Revenue ($USD Millions)$40.6*$45.00 $44.4*$50.01 $27.6*$36.45
Primary EPS ($)$0.83*$1.32 $0.64*$1.51 -$1.46*$0.34

Values retrieved from S&P Global.
Note: Consensus sample sizes were limited (Revenue and EPS: 1 estimate per period), which can reduce reliability in micro/small-cap coverage [GetEstimates].

Key Takeaways for Investors

  • The beat was broad-based and catalyzed by Canada; estimate dispersion is low, but the magnitude of beat versus a negative EPS consensus indicates potential upward estimate revisions for H2, barring macro deterioration .
  • Mix-driven margin compression should improve as Canadian seasonality reverses in Q3 and with incremental ResMetrics contribution; management guided Q3 adjusted gross margin to 40–42% and adjusted EBITDA to $5.5–$7.0M .
  • ResMetrics strengthens tracer diagnostics moat, adds oil tracers and EOR/high‑temperature capabilities, and opens UAE/Kuwait partnerships; integration focus is methodical, voice‑of‑customer driven, with long‑run synergy upside .
  • Liquidity remains robust post‑deal (~$36M), enabling tactical M&A and resilience amid tariff/rig count risks; net cash >$10M supports optionality, including potential capital returns if M&A doesn’t materialize .
  • Watch macro indicators (OPEC+ supply, AECO gas prices, rig counts) and Middle East tender timing; these are key swing factors for H2 trajectory and margin mix .
  • Near-term trading: Positive surprise plus raised FY guide are supportives; monitor Q3 execution against segment guidance (Canada $25–$27M, U.S. $12–$13M, International $5–$6M) and adjusted margin recovery .
  • Medium-term thesis: Leading Canada position, offshore/North Sea growth, and tracer diagnostics consolidation provide multi‑year growth levers with capital‑light model and improving return on capital .