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NCS Multistage Holdings, Inc. (NCSM)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 revenue was $46.54M (+6% YoY) with diluted EPS of $1.37; both revenue and EPS exceeded Wall Street consensus (revenue $46.10M*, EPS $1.17*), aided by ResMetrics contributions and stronger U.S./international activity offsetting Canadian softness . Estimates from S&P Global*.
  • Management narrowed FY25 guidance: revenue to $174–$178M (from $172–$181M prior) and pro forma adjusted EBITDA to $22.5–$24.0M (from $22.0–$25.5M prior), while raising free cash flow after NCI (ex-ResMetrics cash paid) to $11–$13M (from $7–$11M) .
  • Q4 2025 outlook: revenue $41–$45M; adjusted gross margin 40–42%; adjusted EBITDA $5.0–$6.5M; D&A ≈$1.6M. Geography: Canada $23–$25M, U.S. (incl. ResMetrics) $15–$16M, International $3–$4M .
  • Balance sheet/liquidity remain strong: $25.3M cash, $7.4M total debt (finance leases), undrawn ABL borrowing base $19.4M; total liquidity ~$44.7M. Canadian patent-appeal win overturns prior adverse judgment and reduces cost award (case remanded) .

What Went Well and What Went Wrong

  • What Went Well

    • U.S. and international growth: sequential revenue +26% U.S. and +16% international; YoY U.S. +37% and international +38% ex-ResMetrics, driven by fracturing systems/diagnostics and Middle East well construction; ResMetrics added tracer revenue (~$2M in U.S. services) .
    • Adjusted EBITDA delivered above guided midpoint; Q3 adjusted EBITDA $7.04M (15% margin) with strong adjusted gross margin (42%) .
    • Integration momentum: early operational wins (tracer portfolio breadth, lab/sourcing synergies), path to fully aligned workflows by early 2026; synergy target ≈$1M mid-point (on $25–$30M combined tracer revenue base) primarily via cost of sales .

  • What Went Wrong

    • Canada declined: Q3 Canada revenue fell YoY (-19%) due to lower rig counts and market slowdown; sequential pickup reflects seasonal recovery post spring breakup .
    • Gross margin mixed: GAAP gross margin dipped to 40% (from 41% YoY) on product/service mix; offset by favorable ResMetrics contributions; other income fell vs. 2024 due to Oman technical services benefit not recurring .
    • Macro headwinds: management flags deteriorating activity (stagnant U.S. rig count, double-digit Canada declines, Saudi unconventional delays), potential OPEC+ oversupply, and tariff/trade uncertainty weighing on H2/H1’26 visibility .

Financial Results

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$50.00 $36.50 $46.54
Net Income ($USD Millions)$4.10 $0.90 $3.81 (attributable to NCS)
Diluted EPS ($)$1.51 $0.34 $1.37
Adjusted Gross Margin (%)44% 36% 42%
Adjusted EBITDA ($USD Millions)$8.20 $2.20 $7.04

Notes: Q3 consolidated net income was $4.24M, with $3.81M attributable to NCS; CFO referenced $3.8M in remarks .

Segment/geography breakdown (Q3 YoY):

  • Total revenue: $46.54M vs $44.01M .
  • Geography details:
    • United States: $17.15M (vs $11.13M) .
    • Canada: $23.73M (vs $28.87M) .
    • Other Countries: $5.66M (vs $4.01M) .

KPIs and balance sheet (as of 9/30/25):

  • Cash: $25.30M; Total Debt: $7.40M (finance leases); Net Cash: $17.90M .
  • ABL borrowing base availability (undrawn): $19.40M; Total liquidity ≈$44.70M (cash + availability) .
  • Working capital: $86.0M; Net working capital: $63.0M .
  • YTD cash from operations: $9.04M; Free cash flow: $8.74M; FCF less distributions to NCI: $6.84M .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total RevenueFY 2025$172–$181M (combined, incl. ResMetrics) $174–$178M Narrowed; midpoint slightly lower (176.5→176.0)
Adjusted EBITDA (pro forma combined)FY 2025$22.0–$25.5M $22.5–$24.0M Narrowed; midpoint slightly lower (23.75→23.25)
Free Cash Flow (after NCI, ex-ResMetrics cash paid)FY 2025$7–$11M $11–$13M Raised
Total RevenueQ4 2025—$41–$45M New
Adjusted Gross MarginQ4 2025—40–42% New
Adjusted EBITDAQ4 2025—$5.0–$6.5M New
D&A ExpenseQ4 2025—≈$1.6M New
Geographic revenueQ4 2025—Canada $23–$25M; U.S. (incl. ResMetrics) $15–$16M; International $3–$4M New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2025)Previous Mentions (Q2 2025)Current Period (Q3 2025)Trend
ResMetrics integration & tracer diagnostics scaleBuilding new tracer products (Lumen8 sampler, Rapid Trace); expanding solutions; international build-out Acquisition closed; target $10M TTM at >30% EBITDA; broaden Middle East; synergy from best-practice alignment Early integration wins (lab capacity, sourcing, tariffs mitigation); full workflow alignment by early next year; ~$1M synergy midpoint on $25–$30M tracer base Improving
Canada activity & rig countStrong Q1 Canada (+19% YoY); mitigated seasonality via customers working through breakup Cautious H2; slower post-breakup rig recovery; watching 10–15% YoY rig gap Q3 Canada –19% YoY; sequential rebound +32% vs Q2; ongoing softness expected Cautious/Soft
North Sea projectsExpect continued success; increasing customer base 7 customers in 2025; long-term growth pipeline Orders in hand for 2026; potential applicability of deepwater sleeve system in North Sea longer term Positive
Middle East timing & mixGrowing well construction; tracer tenders delayed; shift from radioactive to chemical tracing Expanded presence via ResMetrics (UAE, Kuwait) Continued participation; tracer contracts broadened; Saudi unconventional delays persist Mixed
Macro/tariffsTariff cost mitigation; lower commodity prices weigh on H2 activity Wider ranges due to rig declines, OPEC+, tariffs Deteriorating activity; OPEC+ supply risks; tariff/trade uncertainty persists Deteriorating
Legal/regulatory——Canadian appeal overturns prior adverse judgment; cost award reduced; remanded Positive

Management Commentary

  • “Our revenue and Adjusted EBITDA for the third quarter were each above the midpoint of the range we provided in our last earnings call… When including ResMetrics, our total revenues for the quarter increased by 6% year-over-year.” — Ryan Hummer, CEO .
  • “As of September 30, NCS was in a positive net cash position with cash on hand of $25.3 million and total debt of $7.4 million… total liquidity was $44.7 million including cash on hand and borrowing base availability.” — Mike Morrison, CFO .
  • “We think we can typically convert something on the order of 50% to 60% of our adjusted EBITDA to free cash flow.” — Ryan Hummer, CEO .
  • “We’ve identified other cost savings by integrating ResMetrics into the existing NCS insurance policies and vehicle fleet management programs… not waiting for ‘official’ integration to deliver wins.” — Ryan Hummer, CEO .
  • “Market and industry conditions continue to be challenging, with a stagnating U.S. rig count, double-digit year-over-year activity declines in Canada and continued delays in Saudi unconventional jobs.” — Ryan Hummer, CEO .

Q&A Highlights

  • ResMetrics integration and synergies: Management targets ~$1M synergy midpoint across the $25–$30M combined tracer business via chemical usage optimization and best-practice alignment; full process alignment targeted by early next year .
  • Free cash flow conversion: In a flat environment (no working capital build), 50–60% of adjusted EBITDA converts to FCF after NCI distributions; FY25 midpoint implies ~60% conversion .
  • North Sea pipeline: Orders in hand into 2026; deepwater Raytec PropX sleeve to launch in Gulf of Mexico with broader deepwater applicability (including potential North Sea over time) .
  • Canada dynamics and pricing: YoY rig count down ~15% out of breakup; focus on share gains in Montney and disciplined pricing; current pressure mainly volume not price .
  • Middle East competitive landscape: Qualification-driven with a handful of global tracer competitors; competition “well-behaved,” with value derived from report quality/insights .

Estimates Context

MetricQ1 2025Q2 2025Q3 2025Next Q (Q4 2025)
Revenue Actual ($M)$50.00 $36.50 $46.54 —
Revenue Consensus ($M)$44.40*$27.60*$46.10*$43.60*
EPS Actual ($)$1.51 $0.34 $1.37 —
EPS Consensus ($)$0.64*-$1.46*$1.17*$0.67*
# of Estimates (Rev/EPS)1 / 1*1 / 1*1 / 1*1 / 1*
  • Q3: Revenue $46.54M vs $46.10M* (beat); EPS $1.37 vs $1.17* (beat) .
  • Q2: Revenue $36.50M vs $27.60M* (beat); EPS $0.34 vs -$1.46* (beat) .
  • Q1: Revenue $50.00M vs $44.40M* (beat); EPS $1.51 vs $0.64* (beat) .
    Values with asterisks are retrieved from S&P Global.

Key Takeaways for Investors

  • ResMetrics acquisition is accretive and already contributing to revenue, margins and cash flow with tangible integration wins; expect cost-of-sales synergies to accrue into 2026 .
  • Despite Canadian softness, NCS is diversifying growth across U.S., North Sea and Middle East; orders and product roadmap (deepwater sleeves, StageSaver, Lumen8) support medium-term trajectory .
  • FY25 guidance is tighter and slightly lower on EBITDA midpoint, but free cash flow guidance was raised; robust liquidity (~$44.7M) provides flexibility for organic investments or tactical M&A/return of capital .
  • Q4 guide implies seasonal moderation (revenue $41–$45M, adj. EBITDA $5.0–$6.5M); watch Canada activity, OPEC+ supply and tariff headlines for estimate risk near-term .
  • FCF conversion framework (50–60% of adjusted EBITDA) and positive net cash underpin downside protection; tracer diagnostics scale should support steadier mix over time .
  • Legal overhang reduced: Canadian appeal overturned prior adverse judgment and cut cost award; further proceedings remain but risk skew improved .
  • Near-term trading catalysts: continued integration updates/synergy realization, North Sea order flow, Q4 execution vs guide, and any macro relief in Canada rig trends/tariffs .

Additional Materials Reviewed

  • Q3 2025 8-K Item 2.02 press release and full exhibits including financial statements .
  • Q3 2025 earnings call transcript (full) –.
  • Other Q3-related press releases (scheduling, investor conferences) .
  • Prior quarters’ calls for trend analysis: Q2 2025 –; Q1 2025 –.