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NCS Multistage Holdings, Inc. (NCSM)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue was $45.0 million (+28% YoY) with gross margin at 42% and adjusted gross margin at 43%; adjusted EBITDA rose to $8.2 million (18% margin) and diluted EPS was $1.32; adjusted diluted EPS was $2.27 .
  • Sequentially, revenue increased 2% vs Q3 on stronger Canada (+3%) and international (+11%), while U.S. revenue declined 4% due to typical holiday slowdowns .
  • Management initiated Q1 2025 guidance: revenue $42–$46 million, adjusted gross margin 39–42%, adjusted EBITDA $4.5–$6.5 million; and FY 2025 guidance: revenue $165–$175 million and adjusted EBITDA $20–$23 million, with noted FX headwinds from a stronger USD vs CAD and potential tariff risks .
  • Royalty income process changed to accrue when earned, elevating Q4 “Other income”; CFO expects normalization to ~$1 million per quarter starting Q1 2025, a potential moving part for near-term models .

What Went Well and What Went Wrong

  • What Went Well

    • International expansion drove mix and margin: Middle East tracer diagnostics and AirLock casing buoyancy, plus North Sea frac systems, contributed to Q4 growth and 42% GM; adjusted gross margin reached 43% .
    • Free cash flow and balance sheet strength: FY 2024 FCF after NCI was $9.9 million; year-end cash was $25.9 million with total debt $8.1 million and an undrawn ABL borrowing base of $20.1 million; net cash was $17.7 million, underlining financial flexibility .
    • Strategic product wins: Commercial progress with high-pressure AirLock in the Middle East, expansion of North Sea customer base and readiness for deepwater, plus Repeat Precision’s dissolvable frac plug and SAGD deployments in Canada; “We are commercializing innovative solutions to complex customer challenges” (CEO) .

  • What Went Wrong

    • SG&A pressure: Q4 SG&A rose to $15.0 million, primarily from higher incentive accruals and share-based comp linked to stock price, partially offset by 2023 restructuring savings .
    • FX headwinds and tariff risk: FY 2025 guidance embeds a reduction of ~$4 million revenue and ~$2.5–$3 million adjusted EBITDA from USD/CAD moves; management is monitoring evolving U.S./reciprocal trade actions and steel tariffs .
    • U.S. activity softness: Q4 U.S. revenue fell 4% sequentially on holiday slowdowns, and management expects 2025 U.S. activity flat-to-down vs 2024; natural gas pricing remains a demand headwind for U.S. services .

Financial Results

  • Quarterly comparisons (oldest → newest)
MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$29.690 $44.006 $45.003
Diluted EPS (GAAP) ($)$(1.21) $1.60 $1.32
Adjusted Diluted EPS ($)$(1.03) $1.50 $2.27
Gross Margin (%)38.1% 41% 42%
Adjusted Gross Margin (%)40.3% 42% 43%
Adjusted EBITDA ($USD Millions)$0.916 $7.075 $8.211
Adjusted EBITDA Margin (%)3% 16% 18%
Vs EstimatesNot available (see Estimates Context)Not available (see Estimates Context)Not available (see Estimates Context)
  • Year-over-year quarter comparison
MetricQ4 2023Q4 2024
Revenue ($USD Millions)$35.247 $45.003
Diluted EPS (GAAP) ($)$15.80 (benefit from litigation reversal) $1.32
Adjusted Diluted EPS ($)$(0.36) $2.27
Gross Margin (%)35% 42%
Adjusted Gross Margin (%)37% 43%
Adjusted EBITDA ($USD Millions)$2.529 $8.211
  • Geographic revenue breakdown (quarterly)
Geography ($USD Millions)Q2 2024Q3 2024Q4 2024
United States Total$11.791 $11.134 $10.716
Canada Total$12.058 $28.865 $29.843
Other Countries Total$5.841 $4.007 $4.444
Total Revenues$29.690 $44.006 $45.003
  • KPIs and balance sheet
KPIQ2 2024Q3 2024Q4 2024
Cash & Cash Equivalents ($MM)$18.614 $15.330 $25.880
Total Debt ($MM)$8.9 (finance leases) $8.6 (finance leases) $8.1 (finance leases)
Net Cash ($MM)$9.7 $6.7 $17.7
ABL Borrowing Base ($MM)$14.4 $21.7 $20.1
Liquidity (Cash + ABL avail.) ($MM)—>$37 ~$46
Working Capital ($MM)—$77.344 (prelim) $80.151

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenue ($MM)Q1 2025—$42–$46 New
Adjusted Gross Margin (%)Q1 2025—39%–42% New
Adjusted EBITDA ($MM)Q1 2025—$4.5–$6.5 New
D&A ($MM)Q1 2025—$1.3–$1.4 New
Canada/US/International Revenue ($MM)Q1 2025—Canada $32–$34; US $8–$9; Int’l $2–$3 New
Total Revenue ($MM)FY 2025—$165–$175 New
Adjusted EBITDA ($MM)FY 2025—$20–$23 New
Capex ($MM)FY 2025—$1.5–$2.0 New
FCF after NCI ($MM)FY 2025—$7–$10 New
FX Headwind (embedded)FY 2025—~-$4 revenue; -$2.5–$3 adj. EBITDA New
Total Revenue ($MM)Q4 2024$38–$42 Actual: $45.0 Beat guidance

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
International expansionMiddle East tracer work; North Sea frac systems; int’l revenue on track to >$15MM record Int’l revenue 10% of total; North Sea customer base expanding; Argentina recovery Record int’l revenue $16.5MM (10% mix); Middle East tracer + AirLock; North Sea systems Strengthening
FX impactsStrong USD supports Canadian economics Not emphasizedUSD/CAD expected to reduce reported rev/EBITDA in 2025; explicit guidance quantification Increasing headwind
Royalty incomeNew licensee and catch-up drove Q2 other income Normalize other income $1.1–$1.3MM in Q3 Shift to accrual; Q4 elevated; normalize to ~$1MM/quarter in 2025 Normalizing
Product innovation7-inch sleeve; tracer across 7 countries; dissolvable plug field trials; SAGD entry North Sea drill pipe deployment; high-pressure AirLock progress; CCS/Geothermal tracer Continued commercialization: AirLock agreement in Middle East; dissolvable plug; SAGD scaling Ongoing execution
Tariffs/macroWildfire risk commentary; Canada structural supports (TMX, LNG Canada) Macro steady; Canada seasonality Monitoring U.S./reciprocal trade actions; planning pass-through for steel tariffs Elevated risk watch
Regional activity cadenceSpring breakup drove Q2 Canada down; U.S. up sequentially Q3 Canada rebound; international timing variability Q4 Canada robust through holidays; U.S. seasonal decline; 2025 cadence similar to 2024 Seasonality consistent

Management Commentary

  • “2024 was an important year for NCS, as we began to truly deliver on our core strategies to build upon our leading market positions, capitalize on international and offshore opportunities and commercialize innovative solutions to complex customer challenges.” — CEO Ryan Hummer .
  • “Our full year free cash flow after distributions to non-controlling interest reached $9.9 million… Our resulting net cash position of $17.7 million… further enhancing our strong balance sheet and financial flexibility.” — CEO .
  • “Beginning with the first quarter 2025, we expect our royalty income to normalize to approximately $1 million per quarter.” — CFO Mike Morrison .
  • “We aim to grow revenue in excess of underlying market activity in each of our primary markets… and we will also continue to generate free cash flow.” — CEO on 2025 objectives .
  • “We expect full year revenue to range from $165 million to $175 million and our full year adjusted EBITDA to be in the range of $20 million to $23 million.” — CEO FY 2025 guidance .

Q&A Highlights

  • Canada seasonality and breakup: Management expects typical seasonality in 2025; noted a strong start to January and favorable 2024 weather conditions; activity tapers late March and resumes in June .
  • Margin expansion drivers: Mix shift to international, operating leverage, and 2023 cost reductions contributed to GM expansion; 2025 GM forecast roughly flat YoY given FX headwinds .
  • M&A optionality: Management is actively evaluating small technology plug-ins with clear strategic fit and synergy potential across geographies .
  • R&D pipeline: New products nearing prototype/field trials; partnering on integrated solutions to open new segments (geothermal, CCUS, SAGD) .
  • Royalty accrual change: Q4 royalty accrual elevated other income; go-forward run-rate ~ $1MM/quarter clarifies modeling .

Estimates Context

  • Wall Street consensus estimates via S&P Global were unavailable at time of analysis due to API daily limit; comparisons to consensus for Q4 2024 revenue/EPS/EBITDA could not be included despite attempted retrieval [functions.GetEstimates error].
  • We will monitor and update estimate comparisons when access is restored.

Key Takeaways for Investors

  • Mix-led margin expansion looks sustainable as North Sea/Middle East/Argentina contributions grow; FY 2024 adjusted GM 41% and Q4 adjusted GM 43% underscore quality of revenue mix .
  • Near-term model watch: Other income normalizes (~$1MM/qtr) after Q4 accrual change, reducing volatility in quarterly EPS/EBITDA prints .
  • 2025 guide embeds FX headwinds: ~-$4MM revenue and -$2.5–$3MM adjusted EBITDA from USD/CAD; upside lever is local-currency outperformance across regions .
  • Strong balance sheet provides optionality: $25.9MM cash, net cash $17.7MM, undrawn ABL $20.1MM; capacity for tuck-in tech acquisitions and continued product commercialization .
  • Canada remains the anchor (>60% of revenue), with TMX/LNG Canada structural supports; watch standard seasonality and currency translation impacts on reported margins .
  • Innovation pipeline continues: AirLock Middle East commercialization, dissolvable frac plug, 7-inch sleeve, SAGD/CCUS/geothermal use cases can expand TAM and support pricing/margins .
  • Q4 beat vs prior guidance range ($45.0MM actual vs $38–$42MM guided) suggests conservative guidance posture and potential for intra-quarter upside on mix/timing .