NCS Multistage Holdings, Inc. (NASDAQ:NCSM) (the “Company,” “NCS,”
“we” or “us”), a leading provider of highly engineered products and
support services that facilitate the optimization of oil and
natural gas well completions and field development strategies,
today provided an update on its financial results for the quarter
ended December 31, 2018 and certain financial and operational
results for 2018.
Total revenue for the quarter is expected to be between $49.7
million and $50.7 million. U.S. revenue is expected to be between
$27.3 million and $27.7 million, the midpoint of which represents a
4% increase compared to the third quarter of 2018. The increase was
primarily driven by an increase in product sales, offset by a
slight decline in services revenue. Canadian revenue is
expected to be between $19.1 million and $19.4 million, the
midpoint of which is a 34% decrease compared to the third quarter
of 2018. The decline was primarily attributable to a
reduction in activity amongst our customer base related to low spot
natural gas prices, declining crude oil prices and high crude oil
price differentials. International revenue is expected to be
between $3.3 million and $3.6 million.
Total cost of sales, exclusive of depreciation and amortization
expense is expected to be between $25.5 million and $26.0 million
for the quarter.
Selling, general and administrative expenses are expected to be
between $19.6 million and $20.1 million for the quarter, including
approximately $2.7 million in share-based compensation expense and
approximately $0.3 million in non-recurring professional fees.
NCS ended 2018 with over $25.0 million in cash. Total purchases
of property and equipment, net in 2018 were approximately $15.4
million, and included the purchase and development of software and
technology related to our new enterprise resource planning (ERP)
system.
Due primarily to a deterioration in market conditions in late
2018 that have continued into 2019, particularly in Canada, and the
impact on the profitability of our operations, NCS is currently
conducting an analysis with respect to potentially recording an
impairment to goodwill and other long-lived assets. Based on
our preliminary analysis, we expect to recognize non-cash
impairment charges to goodwill and other long-lived assets in our
financial results for the quarter and twelve months ended December
31, 2018 within income (loss) from operations. We currently expect
the size of the non-cash impairment charges to be up to
substantially all of the goodwill and other long-lived assets that
were reflected on our balance sheet as of September 30, 2018.
We are still in the process of conducting our 2018 annual
impairment test and have additional testing procedures required,
particularly with regards to impairment test for other long-lived
assets. See “Information Regarding Preliminary Results”
below.
NCS’s Chief Executive Officer, Robert Nipper, commented, “NCS
faced a challenging market environment during the fourth quarter of
2018. We performed well in the U.S. and grew our revenue in
the U.S. on a sequential basis, led by yet another quarter with
increased product sales revenue. In Canada, our technology
was used in an NCS-record 227 stage Montney well, completed in a
single tool run, demonstrating the reliability of our technology in
high-intensity completions. We continued to expand outside of
North America, operating in Argentina, China, Norway, Russia and
the United Kingdom during the quarter.
“We are focused on leveraging the investments that we’ve made in
our product and service portfolio, our salesforce and our
infrastructure over the last several years to continue to grow our
business in the U.S. and in international markets. Based on
customer budget announcements and initial activity, we anticipate
that the average rig count in Canada in the first quarter of 2019
will be substantially below the same period in 2018, a result of
low local commodity prices, commodity price differentials and
mandatory production curtailments in the province of Alberta.
We seek to continue to grow our customer base and leverage the full
breadth of our products and services in each of our geographic
markets and we are working to maintain our market position in
Canada during this period of reduced customer activity.
“We continue to be disciplined with respect to our S,G&A and
capital spending, and expect our net capital expenditures to be
lower in 2019 as compared to 2018.
“I’d like to thank our approximately 425 employees for their
efforts and contributions in 2018, and I’d also like to thank our
partners at Repeat Precision. We look forward to providing
our shareholders with a further update on our fourth quarter 2018
earnings release and conference call in early March.”
About NCS Multistage Holdings, Inc.
NCS Multistage Holdings, Inc. is a leading provider of highly
engineered products and support services that facilitate the
optimization of oil and natural gas well completions and field
development strategies. NCS provides products and services to
exploration and production companies for use in horizontal wells in
unconventional oil and natural gas formations throughout North
America and in selected international markets, including Argentina,
China, Russia, and the North Sea. NCS’s common stock is traded on
the NASDAQ Global Select Market under the symbol “NCSM.” Additional
information is available on the website, www.ncsmultistage.com.
Information Regarding Preliminary Results
The preliminary estimated financial information contained in
this press release reflects management’s estimates based solely
upon information available to it as of the date of this press
release and is not a comprehensive statement of our financial
results for the quarter or twelve months ended December 31, 2018.
In addition, the preliminary estimated financial information
presented above has not been audited. We have provided ranges for
the preliminary estimated financial results described above
primarily because our financial closing procedures for the quarter
and twelve months ended December 31, 2018 are not yet complete and
our audit has not been completed. The information presented above
should not be considered a substitute for full audited financial
statements for the twelve months ended December 31, 2018 once they
become available and should not be regarded as a representation by
us or our management as to our actual financial results for the
quarter or twelve months ended December 31, 2018. The ranges for
the preliminary estimated financial results and the potential
recording of an impairment described above constitute
forward-looking statements. The preliminary estimated financial
information presented above, including the potential impairment, is
subject to change, and our actual financial results may differ from
such preliminary estimates and such differences could be material.
Accordingly, you should not place undue reliance upon these
preliminary estimates.
Forward Looking Statements
This press release contains forward-looking statements within
the meaning of the “safe harbor” provisions of the Private
Securities Litigation Reform Act of 1995. Forward-looking
statements can be identified by words such as “anticipates,”
“intends,” “plans,” “seeks,” “believes,” “estimates,” “expects” and
similar references to future periods, or by the inclusion of
forecasts or projections. Examples of forward-looking statements
include, but are not limited to, statements we make regarding the
outlook for our future business and financial performance.
Forward-looking statements are based on our current expectations
and assumptions regarding our business, the economy and other
future conditions. Because forward-looking statements relate to the
future, by their nature, they are subject to inherent
uncertainties, risks and changes in circumstances that are
difficult to predict. As a result, our actual results may differ
materially from those contemplated by the forward-looking
statements. Important factors that could cause our actual results
to differ materially from those in the forward-looking statements
include regional, national or global political, economic, business,
competitive, market and regulatory conditions and the following:
declines in the level of oil and natural gas exploration and
production activity within Canada and the United States; oil and
natural gas price fluctuations; loss of significant customers;
inability to successfully implement our strategy of increasing
sales of products and services into the United States; significant
competition for our products and services; our inability to
successfully develop and implement new technologies, products and
services; our inability to protect and maintain critical
intellectual property assets; currency exchange rate fluctuations;
impact of severe weather conditions; restrictions on the
availability of our customers to obtain water essential to the
drilling and hydraulic fracturing processes; our failure to
identify and consummate potential acquisitions; our inability to
integrate or realize the expected benefits from acquisitions; our
inability to meet regulatory requirements for use of certain
chemicals by our tracer diagnostics business; our inability to
accurately predict customer demand; losses and liabilities from
uninsured or underinsured business activities; changes in
legislation or regulation governing the oil and natural gas
industry, including restrictions on emissions of greenhouse gases;
failure to comply with or changes to federal, state and local and
non-U.S. laws and other regulations, including environmental
regulations and the U.S. Tax Cuts and Jobs Act of 2017; changes in
trade policy, including the impact of additional tariffs; loss of
our information and computer systems; system interruptions or
failures, including cyber-security breaches, identity theft or
other disruptions that could compromise our information; our
failure to establish and maintain effective internal control over
financial reporting; complications with the design and
implementation of our new enterprise resource planning system; our
success in attracting and retaining qualified employees and key
personnel; our inability to satisfy technical requirements and
other specifications under contracts and contract tenders and other
factors discussed or referenced in our filings made from time to
time with the Securities and Exchange Commission. Any
forward-looking statement made by us in this press release speaks
only as of the date on which we make it. Factors or events that
could cause our actual results to differ may emerge from time to
time, and it is not possible for us to predict all of them. We
undertake no obligation to publicly update or revise any
forward-looking statement, whether as a result of new information,
future developments or otherwise, except as may be required by
law.
Contact
Ryan HummerChief Financial Officer(281)
453-2222IR@ncsmultistage.com
NCS Multistage (NASDAQ:NCSM)
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