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 announced its results for the quarter ended June 30,
2019.
Financial Review
Revenues were $39.8 million for the quarter ended June 30,
2019, which was a decrease of 8% compared to the second quarter of
2018. The decrease was primarily attributable to lower volumes of
fracturing systems product sales and services in the U.S. and
Canada, and lower tracer diagnostics revenue in the United States.
The decrease was partially offset by increased sales of our well
construction and Repeat Precision, LLC (“Repeat Precision”)
products. Total revenues decreased by 25% as compared to
the first quarter of 2019 with decreases of 54% in Canada and
39% outside of North America partially offset by an increase of 6%
in the United States.
Gross profit, which we define as total revenues less total cost
of sales exclusive of depreciation and amortization, was $16.7
million, or 42% of total revenues, in the second quarter of 2019, a
decrease compared to $23.5 million, or 54% of total revenues, in
the second quarter of 2018. Cost of sales was a higher percentage
of revenues due to reduced fixed cost utilization related to lower
sales volumes for fracturing systems product sales and services,
especially in the U.S. and Canada, higher-than-anticipated use of
third-party machining capacity, reductions in the pricing of our
products and services, and higher cost of sales in tracer
diagnostics, related to field service staffing levels and increased
chemical costs associated with tariffs imposed on certain imports
from China in September 2018. These increases were partially offset
by increased sales of well construction and Repeat Precision
products, which enabled better utilization of fixed costs.
Selling, general and administrative (“SG&A”) expenses
increased in the second quarter as compared to the prior year due
to increases in personnel, higher professional services expenses,
including litigation expenses and support for our new enterprise
resource planning system, higher share-based compensation
expense and an increase in bad debt expense, partially offset by a
reduction in accrued bonus expense and other professional
services.
During the second quarter of 2019, we performed an impairment
test for goodwill and determined that the carrying value of one of
our reporting units exceeded its fair value. We recorded an
impairment charge of $7.9 million for our tracer diagnostic
services reporting unit as a result of a further deterioration
in customer activity levels in North America. This resulted in
lower demand for oilfield services driving a decrease in our market
share and increased customer and competitor-driven pricing
pressures in addition to a decline in the quoted price of our
common stock. Following the impairment, our tracer diagnostic
services reporting unit has no remaining goodwill balance. There
was no indication an impairment may have occurred in any other
reporting unit.
Net loss was $(22.3) million, or $(0.48) per diluted share, for
the quarter ended June 30, 2019, which included a net impact
of $8.2 million (after tax effect of $17.1 million, or $0.37
per diluted share) related to an impairment charge and realized and
unrealized foreign currency gains and losses. The income tax
adjustment was significantly affected by the income tax valuation
allowance recorded to reduce the carrying value of our U.S.
deferred tax asset and the tax effect of a non-deductible goodwill
impairment. Adjusted net loss, which excludes these items, was
$(5.2) million, or $(0.11) per diluted share, for the quarter ended
June 30, 2019. This compares to a net loss of
$(4.1) million, or $(0.09) per diluted share, in the second
quarter of 2018, which included a net expense of $0.1 million ($0.1
million after tax, or $0.00 per diluted share) related to the
change in fair value of contingent consideration and realized and
unrealized foreign currency gains and losses. Adjusted net loss,
which excludes these items, was $(4.0) million, or $(0.09) per
diluted share, for the quarter ended June 30, 2018.
Adjusted EBITDA was $(1.0) million for the quarter ended
June 30, 2019, a decrease of $(6.4) million as compared to the
second quarter of 2018. Adjusted EBITDA margin for the quarter was
(3%), as compared to 12% for the second quarter of 2018.
Capital Expenditures and Liquidity
The Company incurred capital expenditures of $1.3 million, net,
for the second quarter of 2019 and $4.1 million, net, for the six
months ended June 30, 2019.
As of June 30, 2019, the Company had $12.2 million in cash,
total potential availability under its revolving credit facility of
$59.0 million and $19.5 million in total debt. During the second
quarter, the Company reduced its total debt by $6.5 million,
including a $4.0 million reduction in its revolving credit facility
balance.
Cost Reduction Initiatives
The Company is implementing cost reduction initiatives in
response to continuing decreases in current and expected customer
activity levels in North America. In July 2019, we reduced our
employee workforce by approximately six percent. In connection
with the workforce reduction, we expect to incur one-time severance
costs between $0.6 million to $0.7 million, which will be reflected
in our consolidated statements of operations under SG&A in the
third quarter.
Review and Outlook
NCS’s Chief Executive Officer, Robert Nipper, commented, “We
continue to face a challenging market environment in our primary
operating areas in the U.S. and Canada. We were able to deliver
total revenue in the quarter that met the high end of the $35 - $40
million range that we guided for this quarter on our last earnings
call, primarily due to continued market share gains in Canada and
strong performance in our Repeat Precision joint venture.
We experienced meaningful pressure on our gross margin during
the quarter, reflecting continued customer and competitor driven
pricing pressure, the underutilization of fixed field service
personnel and other costs during a seasonally slower quarter,
higher-than-anticipated use of third-party machining capacity, and
expenses incurred in advance of specific customer opportunities
that we expect to contribute to revenue in the second half of the
year. In addition, our SG&A costs in the second quarter were
approximately in line with the first quarter, but higher than the
second quarter of 2018.
We continue to expect that capital spending, drilling and
completions activity for our U.S. customers will be lower than last
year, and that activity will continue to decline from current
levels in the second half of the year. Customer activity in Canada
continues to be materially lower on a year-over year basis, with
the average rig count lower by 32% on a year-to-date basis through
the end of July. We believe that operating activity in Canada is
likely to remain significantly below historical averages until
additional oil and natural gas pipeline capacity is placed into
service.
In response to these challenging market conditions, which we
expect to persist into the foreseeable future, we are implementing
cost reduction initiatives, and in July reduced our headcount by
approximately 6% and implemented salary reductions for certain
executives. We believe that these actions will result in an
immediate pre-tax annualized cost reduction of approximately $5.0
million, which will primarily be reflected in SG&A. We will
continue to evaluate other opportunities to further reduce our
spending, which we expect to implement in the coming quarters. As
part of the reduction in workforce, we have also made changes to
our reporting structure, which we believe will position us to be
more responsive to changes in the market environment and accelerate
new product development.
I’m very proud of my co-workers at NCS who continue to deliver
exemplary operational performance and customer service and who
contributed to our highlights during the quarter, including:
- Our seventh straight quarter of sequential revenue growth in
product sales in the U.S.;
- Strong performance at Repeat Precision, including further
market penetration of our Purple Seal Express integrated frac plug
and setting tool system and initial sales of our RP 10 and RP 20
single-use, disposable setting tools;
- Additional market share gains in Canada, evidenced by our
revenue performance with a year-over-year revenue decline of 17%,
outperforming a comparable rig count decline of 24%; and
- Zero recordable incidents through the first half of 2019,
highlighting our commitment to safety.
We are executing on the key components of our strategy, which
includes leveraging the full suite of our product and service
offering across our geographic markets, commercializing new
technologies that help our customers save money and operate more
efficiently and making disciplined investments that will enable us
to leverage our capital-light business model to generate free cash
flow, enhance our balance sheet and improve financial returns.
At the same time, we are focused on controlling the items that
we can manage, including the cost reduction initiatives and our
capital spending, which we now expect to be between $7.0 to $10.0
million in 2019, the midpoint of which is $2.5 million below the
range we guided to at the beginning of the year and approximately
45% below our capital spending in 2018.
We are focused on providing our customers with the products and
services that will enable them to succeed, which will in turn allow
us to generate value for our shareholders. Taking actions like
those we did in July are never easy, and I want to thank all of my
co-workers at NCS and Repeat Precision – in my view the best team
in our industry – for their incredible efforts and support of our
strategy.”
Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBITDA Less
Share-Based Compensation, Adjusted Net (Loss) Income, Adjusted Net
(Loss) Earnings per Diluted Share and Free Cash Flow are non-GAAP
financial measures. For an explanation of these measures and a
reconciliation, refer to “Non-GAAP Financial Measures” below.
Conference Call
The Company will host a conference call to discuss its second
quarter 2019 results on Tuesday, August 6, 2019 at 7:30 a.m.
Central Time (8:30 a.m. Eastern Time). To join the conference
call from within the United States, participants may dial (844)
400-1696. To join the conference call from outside of the United
States, participants may dial (703) 736-7385. The conference access
code is 8896511. Participants are encouraged to log in to the
webcast or dial in to the conference call approximately ten minutes
prior to the start time. To listen via live webcast, please visit
the Investors section of the Company’s website,
http://www.ncsmultistage.com.
An audio replay of the conference call will be available shortly
after the conclusion of the call and will remain available for
approximately seven days. It can be accessed by dialing (855)
859-2056 within the United States or (404) 537-3406 outside of the
United States. The conference call replay access code is 8896511.
The replay will also be available in the Investors section of the
Company’s website shortly after the conclusion of the call and will
remain available for approximately seven days.
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.
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
accurately predict customer demand; impairment in the carrying
value of long-lived assets and goodwill; 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;
losses and liabilities from uninsured or underinsured business
activities; our failure to identify and consummate potential
acquisitions; our inability to integrate or realize the expected
benefits from acquisitions; impact of severe weather conditions;
restrictions on the availability of our customers to obtain water
essential to the drilling and hydraulic fracturing processes; our
inability to meet regulatory requirements for use of certain
chemicals by our tracer diagnostics business; change in trade
policy, including the impact of additional tariffs; 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; 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 HOLDINGS,
INC.CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(In thousands, except per share
data)(Unaudited)
|
Three Months Ended |
|
Six Months Ended |
|
June 30, |
|
June 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Revenues |
|
|
|
|
|
|
|
|
|
|
|
Product sales |
$ |
29,945 |
|
|
$ |
27,773 |
|
|
$ |
67,177 |
|
|
$ |
77,881 |
|
Services |
|
9,823 |
|
|
|
15,625 |
|
|
|
25,441 |
|
|
|
36,203 |
|
Total revenues |
|
39,768 |
|
|
|
43,398 |
|
|
|
92,618 |
|
|
|
114,084 |
|
Cost of
sales |
|
|
|
|
|
|
|
|
|
|
|
Cost of product sales,
exclusive of depreciation and amortization expense shown below |
|
16,490 |
|
|
|
12,622 |
|
|
|
33,236 |
|
|
|
37,325 |
|
Cost of services, exclusive of
depreciation and amortization expense shown below |
|
6,591 |
|
|
|
7,290 |
|
|
|
16,608 |
|
|
|
16,179 |
|
Total cost of sales, exclusive of depreciation and amortization
expense shown below |
|
23,081 |
|
|
|
19,912 |
|
|
|
49,844 |
|
|
|
53,504 |
|
Selling, general and
administrative expenses |
|
22,893 |
|
|
|
22,125 |
|
|
|
45,919 |
|
|
|
43,152 |
|
Depreciation |
|
1,495 |
|
|
|
1,156 |
|
|
|
2,921 |
|
|
|
2,255 |
|
Amortization |
|
1,137 |
|
|
|
3,283 |
|
|
|
2,298 |
|
|
|
6,604 |
|
Change in fair value of
contingent consideration |
|
— |
|
|
|
213 |
|
|
|
37 |
|
|
|
(1,140 |
) |
Impairment |
|
7,919 |
|
|
|
— |
|
|
|
7,919 |
|
|
|
— |
|
(Loss) income from operations |
|
(16,757 |
) |
|
|
(3,291 |
) |
|
|
(16,320 |
) |
|
|
9,709 |
|
Other income
(expense) |
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
(556 |
) |
|
|
(608 |
) |
|
|
(1,073 |
) |
|
|
(1,065 |
) |
Other income (expense),
net |
|
17 |
|
|
|
(44 |
) |
|
|
90 |
|
|
|
40 |
|
Foreign currency exchange
(loss) gain |
|
(250 |
) |
|
|
106 |
|
|
|
(547 |
) |
|
|
289 |
|
Total other expense |
|
(789 |
) |
|
|
(546 |
) |
|
|
(1,530 |
) |
|
|
(736 |
) |
(Loss) income before income tax |
|
(17,546 |
) |
|
|
(3,837 |
) |
|
|
(17,850 |
) |
|
|
8,973 |
|
Income tax expense (benefit) |
|
2,022 |
|
|
|
(1,019 |
) |
|
|
11,596 |
|
|
|
(74 |
) |
Net (loss) income |
|
(19,568 |
) |
|
|
(2,818 |
) |
|
|
(29,446 |
) |
|
|
9,047 |
|
Net income attributable to
non-controlling interest |
|
2,733 |
|
|
|
1,235 |
|
|
|
4,821 |
|
|
|
2,122 |
|
Net (loss) income
attributable to NCS Multistage Holdings, Inc. |
$ |
(22,301 |
) |
|
$ |
(4,053 |
) |
|
$ |
(34,267 |
) |
|
$ |
6,925 |
|
(Loss) earnings per
common share |
|
|
|
|
|
|
|
|
|
|
|
Basic (loss) earnings per common share attributable to NCS
Multistage Holdings, Inc. |
$ |
(0.48 |
) |
|
$ |
(0.09 |
) |
|
$ |
(0.74 |
) |
|
$ |
0.15 |
|
Diluted (loss) earnings per common share attributable to NCS
Multistage Holdings, Inc. |
$ |
(0.48 |
) |
|
$ |
(0.09 |
) |
|
$ |
(0.74 |
) |
|
$ |
0.15 |
|
Weighted average
common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
46,766 |
|
|
|
44,778 |
|
|
|
46,380 |
|
|
|
44,517 |
|
Diluted |
|
46,766 |
|
|
|
44,778 |
|
|
|
46,380 |
|
|
|
47,186 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NCS MULTISTAGE HOLDINGS,
INC.CONDENSED CONSOLIDATED BALANCE
SHEETS(In thousands, except share
data)(Unaudited)
|
June 30, |
|
December 31, |
|
2019 |
|
2018 |
Assets |
|
|
|
|
|
Current assets |
|
|
|
|
|
Cash and cash equivalents |
$ |
12,175 |
|
|
$ |
25,131 |
|
Accounts receivable—trade, net of allowances of $709 and $311 at
2019 and 2018, respectively |
|
42,366 |
|
|
|
49,984 |
|
Inventories |
|
37,964 |
|
|
|
32,753 |
|
Prepaid expenses and other current assets |
|
2,274 |
|
|
|
2,037 |
|
Other current receivables |
|
3,379 |
|
|
|
4,685 |
|
Total current assets |
|
98,158 |
|
|
|
114,590 |
|
Noncurrent assets |
|
|
|
|
|
Property and equipment, net |
|
34,407 |
|
|
|
32,296 |
|
Goodwill |
|
15,222 |
|
|
|
23,112 |
|
Identifiable intangibles, net |
|
47,491 |
|
|
|
48,985 |
|
Deposits and other assets |
|
8,624 |
|
|
|
1,392 |
|
Deferred income taxes, net |
|
— |
|
|
|
9,326 |
|
Total noncurrent assets |
|
105,744 |
|
|
|
115,111 |
|
Total assets |
$ |
203,902 |
|
|
$ |
229,701 |
|
Liabilities and
Stockholders’ Equity |
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Accounts payable—trade |
$ |
11,933 |
|
|
$ |
7,167 |
|
Accrued expenses |
|
3,383 |
|
|
|
4,084 |
|
Income taxes payable |
|
403 |
|
|
|
184 |
|
Current contingent consideration |
|
— |
|
|
|
9,963 |
|
Other current liabilities |
|
4,285 |
|
|
|
1,991 |
|
Current maturities of long-term debt |
|
1,646 |
|
|
|
2,236 |
|
Total current liabilities |
|
21,650 |
|
|
|
25,625 |
|
Noncurrent liabilities |
|
|
|
|
|
Long-term debt, less current maturities |
|
17,869 |
|
|
|
23,455 |
|
Other long-term liabilities |
|
5,312 |
|
|
|
1,258 |
|
Deferred income taxes, net |
|
3,214 |
|
|
|
3,132 |
|
Total noncurrent liabilities |
|
26,395 |
|
|
|
27,845 |
|
Total liabilities |
|
48,045 |
|
|
|
53,470 |
|
Commitments and
contingencies |
|
|
|
|
|
Stockholders’ equity |
|
|
|
|
|
Preferred stock, $0.01 par value, 10,000,000 shares authorized, no
shares issued and outstanding at June 30, 2019 and one share
issued and outstanding at December 31, 2018 |
|
— |
|
|
|
— |
|
Common stock, $0.01 par value, 225,000,000 shares authorized,
46,752,755 shares issued and 46,669,918 shares outstanding at
June 30, 2019 and 45,100,771 shares issued and 45,072,463
shares outstanding at December 31, 2018 |
|
468 |
|
|
|
451 |
|
Additional paid-in capital |
|
418,365 |
|
|
|
411,423 |
|
Accumulated other comprehensive loss |
|
(81,008 |
) |
|
|
(84,030 |
) |
Retained deficit |
|
(200,473 |
) |
|
|
(166,206 |
) |
Treasury stock, at cost; 82,837 shares at June 30, 2019 and
28,308 shares at December 31, 2018 |
|
(646 |
) |
|
|
(337 |
) |
Total stockholders’ equity |
|
136,706 |
|
|
|
161,301 |
|
Non-controlling interest |
|
19,151 |
|
|
|
14,930 |
|
Total equity |
|
155,857 |
|
|
|
176,231 |
|
Total liabilities and stockholders' equity |
$ |
203,902 |
|
|
$ |
229,701 |
|
|
|
|
|
|
|
|
|
NCS MULTISTAGE HOLDINGS,
INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS(In
thousands)(Unaudited)
|
Six Months Ended |
|
June 30, |
|
2019 |
|
2018 |
Cash flows from operating activities |
|
|
|
|
|
|
|
Net (loss) income |
$ |
(29,446 |
) |
|
$ |
9,047 |
|
Adjustments to reconcile net
(loss) income to net cash provided by operating activities: |
|
|
|
|
|
Depreciation and amortization |
|
5,219 |
|
|
|
8,859 |
|
Impairment |
|
7,919 |
|
|
|
— |
|
Amortization of deferred loan cost |
|
161 |
|
|
|
168 |
|
Share-based compensation |
|
6,526 |
|
|
|
5,332 |
|
Provision for inventory obsolescence |
|
(51 |
) |
|
|
858 |
|
Deferred income tax expense (benefit) |
|
9,278 |
|
|
|
(2,185 |
) |
Gain on sale of property and equipment |
|
(19 |
) |
|
|
(16 |
) |
Change in fair value of contingent consideration |
|
37 |
|
|
|
(1,140 |
) |
Provision for doubtful accounts |
|
1,462 |
|
|
|
— |
|
Payment of contingent consideration |
|
(3,042 |
) |
|
|
— |
|
Changes in operating assets
and liabilities: |
|
|
|
|
|
Accounts receivable—trade |
|
6,664 |
|
|
|
6,753 |
|
Inventories |
|
(4,629 |
) |
|
|
391 |
|
Prepaid expenses and other assets |
|
243 |
|
|
|
(2,066 |
) |
Accounts payable—trade |
|
5,344 |
|
|
|
1,587 |
|
Accrued expenses |
|
(749 |
) |
|
|
(1,284 |
) |
Other liabilities |
|
(1,165 |
) |
|
|
284 |
|
Income taxes receivable/payable |
|
2,320 |
|
|
|
(19,093 |
) |
Net cash provided by operating activities |
|
6,072 |
|
|
|
7,495 |
|
Cash flows from
investing activities |
|
|
|
|
|
Purchases of property and
equipment |
|
(4,080 |
) |
|
|
(3,068 |
) |
Purchase and development of
software and technology |
|
(297 |
) |
|
|
(714 |
) |
Proceeds from sales of
property and equipment |
|
249 |
|
|
|
232 |
|
Net cash used in investing activities |
|
(4,128 |
) |
|
|
(3,550 |
) |
Cash flows from
financing activities |
|
|
|
|
|
Equipment note borrowings |
|
835 |
|
|
|
— |
|
Payments on equipment note and
finance leases |
|
(4,130 |
) |
|
|
(846 |
) |
Promissory note
borrowings |
|
— |
|
|
|
4,884 |
|
Payments on promissory
note |
|
— |
|
|
|
(7,749 |
) |
Payments on revolver |
|
(4,000 |
) |
|
|
— |
|
Payment of contingent
consideration |
|
(6,958 |
) |
|
|
— |
|
Proceeds from the exercise of
options for common stock |
|
— |
|
|
|
802 |
|
Treasury shares withheld |
|
(309 |
) |
|
|
— |
|
Distribution to noncontrolling
interest |
|
(600 |
) |
|
|
— |
|
Proceeds from the issuance of
ESPP shares |
|
677 |
|
|
|
— |
|
Payment of deferred loan cost
related to senior secured credit facility |
|
(871 |
) |
|
|
— |
|
Net cash used in financing activities |
|
(15,356 |
) |
|
|
(2,909 |
) |
Effect of exchange rate
changes on cash and cash equivalents |
|
456 |
|
|
|
(1,368 |
) |
Net change in cash and cash equivalents |
|
(12,956 |
) |
|
|
(332 |
) |
Cash and cash equivalents
beginning of period |
|
25,131 |
|
|
|
33,809 |
|
Cash and cash equivalents end
of period |
$ |
12,175 |
|
|
$ |
33,477 |
|
Supplemental cash flow
information |
|
|
|
|
|
Cash paid for income taxes
(net of refunds) |
$ |
(68 |
) |
|
$ |
20,830 |
|
|
|
|
|
|
|
|
|
NCS MULTISTAGE HOLDINGS,
INC.RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL
INFORMATION(In thousands, except per share
data) (Unaudited)
Non-GAAP Financial Measures
EBITDA is defined as net (loss) income before interest expense,
net, income tax expense and depreciation and amortization. Adjusted
EBITDA is defined as EBITDA adjusted to exclude certain items which
we believe are not reflective of ongoing operating performance or
which, in the case of an impairment and share-based compensation,
are non-cash in nature. Adjusted EBITDA margin represents Adjusted
EBITDA as a percentage of total revenues. Adjusted EBITDA Less
Share-Based Compensation is defined as Adjusted EBITDA minus
share-based compensation expense. Adjusted Net (Loss) Income is
defined as net (loss) income attributable to NCS Multistage
Holdings, Inc. adjusted to exclude certain items which we believe
are not reflective of ongoing performance. Adjusted Net (Loss)
Earnings per Diluted Share is defined as Adjusted Net (Loss) Income
divided by our diluted weighted average common shares outstanding
during the relevant period. Free cash flow is defined as net cash
provided by (used in) operating activities less purchases of
property and equipment (inclusive of the purchase and development
of software and technology) plus proceeds from sales of property
and equipment, as presented in our consolidated statement of cash
flows. We believe that Adjusted EBITDA, Adjusted Net (Loss) Income
and Adjusted Net (Loss) Earnings per Diluted Share are important
measures that exclude costs that management believes do not reflect
our ongoing operating performance and, in the case of Adjusted
EBITDA, certain costs associated with our capital structure. We
believe that Adjusted EBITDA Less Share-Based Compensation presents
our financial performance in a manner that is comparable to the
presentation provided by many of our peers. We believe free cash
flow is useful because it provides information to investors
regarding the cash that was available in the period that was in
excess of our needs to fund our capital expenditures and other
investment needs. Accordingly, Adjusted EBITDA, Adjusted EBITDA
margin, Adjusted EBITDA Less Share-Based Compensation, Adjusted Net
(Loss) Income, Adjusted Net (Loss) Earnings per Diluted Share and
Free Cash Flow are key metrics that management uses to assess the
period-to-period performance of our core business
operations. We believe that presenting Adjusted EBITDA,
Adjusted EBITDA margin, Adjusted EBITDA Less Share-Based
Compensation, Adjusted Net (Loss) Income and Adjusted Net (Loss)
Earnings per Diluted Share enables investors to assess our
performance from period to period using the same metrics utilized
by management and that Adjusted EBITDA, Adjusted EBITDA margin,
Adjusted EBITDA Less Share-Based Compensation, Adjusted Net (Loss)
Income and Adjusted Net (Loss) Earnings per Diluted Share enable
investors to evaluate our performance relative to other companies
that are not subject to such factors.
EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBITDA
Less Share-Based Compensation, Adjusted Net (Loss) Income, Adjusted
Net (Loss) Earnings per Diluted Share and Free Cash Flow (our
“non-GAAP financial measures”) are not defined under generally
accepted accounting principles (“GAAP”), are not measures of net
income, income from operations, cash provided by operating
activities or any other performance measure derived in accordance
with GAAP, and are subject to important limitations. Our non-GAAP
financial measures may not be comparable to similarly titled
measures of other companies in our industry and are not measures of
performance calculated in accordance with GAAP. Our non-GAAP
financial measures have important limitations as analytical tools
and you should not consider them in isolation or as substitutes for
analysis of our financial performance as reported under GAAP and
they should not be considered as alternatives to net income (loss),
cash provided by operating activities or any other performance
measures derived in accordance with GAAP as measures of operating
performance or as alternatives to cash flow from operating
activities as measures of our liquidity.
The tables below set forth reconciliations of our non-GAAP
financial measures to the most directly comparable measure of
financial performance calculated under GAAP:
NCS MULTISTAGE HOLDINGS,
INC.RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL
INFORMATION(In thousands, except per share
data) (Unaudited)
ADJUSTED NET (LOSS) INCOME AND ADJUSTED
NET (LOSS) EARNINGS PER DILUTED SHARE
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, 2019 |
|
June 30, 2018 |
|
June 30, 2019 |
|
June 30, 2018 |
|
|
Effect on Net Loss |
|
Impact on Diluted Loss Per Share |
|
Effect on Net Loss |
|
Impact on Diluted Loss Per Share |
|
Effect on Net Loss |
|
Impact on Diluted Loss Per Share |
|
Effect on Net Income |
|
Impact on Diluted Earnings Per Share |
Net (loss) income attributable to NCS Multistage Holdings,
Inc. |
|
$ |
(22,301 |
) |
|
$ |
(0.48 |
) |
|
$ |
(4,053 |
) |
|
$ |
(0.09 |
) |
|
$ |
(34,267 |
) |
|
$ |
(0.74 |
) |
|
$ |
6,925 |
|
|
$ |
0.15 |
|
Adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment (a) |
|
|
7,919 |
|
|
|
0.17 |
|
|
|
— |
|
|
|
— |
|
|
|
7,919 |
|
|
|
0.17 |
|
|
|
— |
|
|
|
— |
|
Realized and unrealized losses (gains) (b) |
|
|
245 |
|
|
|
0.01 |
|
|
|
(88 |
) |
|
|
— |
|
|
|
542 |
|
|
|
0.01 |
|
|
|
(298 |
) |
|
|
(0.01 |
) |
Change in fair value of contingent consideration (c) |
|
|
— |
|
|
|
— |
|
|
|
213 |
|
|
|
— |
|
|
|
37 |
|
|
|
— |
|
|
|
(1,140 |
) |
|
|
(0.03 |
) |
Income tax impact from adjustments (d) |
|
|
8,895 |
|
|
|
0.19 |
|
|
|
(29 |
) |
|
|
— |
|
|
|
18,712 |
|
|
|
0.41 |
|
|
|
387 |
|
|
|
0.01 |
|
Adjusted net (loss)
income attributable to NCS Multistage
Holdings, Inc. |
|
$ |
(5,242 |
) |
|
$ |
(0.11 |
) |
|
$ |
(3,957 |
) |
|
$ |
(0.09 |
) |
|
$ |
(7,057 |
) |
|
$ |
(0.15 |
) |
|
$ |
5,874 |
|
|
$ |
0.12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
_____________________
- Represents non-cash impairment charge for goodwill as the fair
value was lower than the carrying value.
- Represents realized and unrealized foreign currency translation
gains and losses primarily due to movement in the foreign currency
exchange rates between the periods.
- The change in 2019 represents the difference between the
December 31, 2018 liability balance and the $10.0 million cash
payment for the Repeat Precision earn-out consideration, which was
paid to our joint venture partner on January 31, 2019. The change
in 2018 was due to the revaluation of the earn-out obligations
associated with our acquisitions.
- Represents the income tax adjustments including the valuation
allowance recorded to reduce the carrying value of our U.S.
deferred tax asset and the tax effect of a non-deductible goodwill
impairment.
NCS MULTISTAGE HOLDINGS,
INC.RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL
INFORMATION(In thousands)
(Unaudited)
ADJUSTED EBITDA, ADJUSTED EBITDA MARGIN,
AND ADJUSTED EBITDA LESS SHARE-BASED COMPENSATION
|
Three Months Ended |
|
Six Months Ended |
|
June 30, |
|
June 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Net (loss) income |
$ |
(19,568 |
) |
|
$ |
(2,818 |
) |
|
$ |
(29,446 |
) |
|
$ |
9,047 |
|
Income tax expense
(benefit) |
|
2,022 |
|
|
|
(1,019 |
) |
|
|
11,596 |
|
|
|
(74 |
) |
Interest expense, net |
|
556 |
|
|
|
608 |
|
|
|
1,073 |
|
|
|
1,065 |
|
Depreciation |
|
1,495 |
|
|
|
1,156 |
|
|
|
2,921 |
|
|
|
2,255 |
|
Amortization |
|
1,137 |
|
|
|
3,283 |
|
|
|
2,298 |
|
|
|
6,604 |
|
EBITDA |
|
(14,358 |
) |
|
|
1,210 |
|
|
|
(11,558 |
) |
|
|
18,897 |
|
Impairment (a) |
|
7,919 |
|
|
|
— |
|
|
|
7,919 |
|
|
|
— |
|
Share-based compensation
(b) |
|
3,314 |
|
|
|
2,958 |
|
|
|
6,282 |
|
|
|
5,332 |
|
Professional fees (c) |
|
1,577 |
|
|
|
866 |
|
|
|
2,377 |
|
|
|
762 |
|
Unrealized foreign currency
loss (d) |
|
176 |
|
|
|
6 |
|
|
|
250 |
|
|
|
1,657 |
|
Realized foreign currency loss
(gain) (e) |
|
74 |
|
|
|
(112 |
) |
|
|
297 |
|
|
|
(1,946 |
) |
Change in fair value of
contingent consideration (f) |
|
— |
|
|
|
213 |
|
|
|
37 |
|
|
|
(1,140 |
) |
Other (g) |
|
268 |
|
|
|
189 |
|
|
|
645 |
|
|
|
430 |
|
Adjusted EBITDA |
$ |
(1,030 |
) |
|
$ |
5,330 |
|
|
$ |
6,249 |
|
|
$ |
23,992 |
|
Adjusted EBITDA Margin |
|
(3 |
)% |
|
|
12 |
% |
|
|
7 |
% |
|
|
21 |
% |
Adjusted EBITDA Less Share-Based Compensation |
$ |
(4,344 |
) |
|
$ |
2,372 |
|
|
$ |
(33 |
) |
|
$ |
18,660 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
_____________________
- Represents non-cash impairment charge for goodwill as the fair
value was lower than the carrying value.
- Represents non-cash compensation charges related to share-based
compensation granted to our officers, employees and directors.
- Represents non-capitalizable costs of professional services
incurred in connection with our financings, legal proceedings and
the evaluation of potential acquisitions.
- Represents unrealized foreign currency translation gains and
losses primarily due to movement in the foreign currency exchange
rates between the periods.
- Represents realized foreign currency translation gains and
losses due to movement in the foreign currency exchange rates
between the periods.
- The change in 2019 represents the difference between the
December 31, 2018 liability balance and the $10.0 million cash
payment for the Repeat Precision earn-out consideration, which was
paid to our joint venture partner on January 31, 2019. The change
in 2018 was due to the revaluation of the earn-out obligations
associated with our acquisitions.
- Represents the impact of a research and development subsidy
that is included in income tax expense (benefit) in accordance with
GAAP along with other charges and credits.
NCS MULTISTAGE HOLDINGS,
INC.REVENUE BY GEOGRAPHIC AREA(In
thousands) (Unaudited)
|
Three Months Ended |
|
Six Months Ended |
|
June 30, |
|
June 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
United States |
|
|
|
|
|
|
|
|
|
|
|
Product sales |
$ |
21,069 |
|
$ |
16,309 |
|
$ |
40,633 |
|
$ |
29,886 |
Services |
|
5,674 |
|
|
11,396 |
|
|
11,455 |
|
|
19,819 |
Total United States |
|
26,743 |
|
|
27,705 |
|
|
52,088 |
|
|
49,705 |
Canada |
|
|
|
|
|
|
|
|
|
|
|
Product sales |
|
8,801 |
|
|
10,740 |
|
|
25,422 |
|
|
46,438 |
Services |
|
2,705 |
|
|
3,132 |
|
|
11,080 |
|
|
14,609 |
Total Canada |
|
11,506 |
|
|
13,872 |
|
|
36,502 |
|
|
61,047 |
Other
Countries |
|
|
|
|
|
|
|
|
|
|
|
Product sales |
|
75 |
|
|
724 |
|
|
1,122 |
|
|
1,557 |
Services |
|
1,444 |
|
|
1,097 |
|
|
2,906 |
|
|
1,775 |
Total Other Countries |
|
1,519 |
|
|
1,821 |
|
|
4,028 |
|
|
3,332 |
Total |
|
|
|
|
|
|
|
|
|
|
|
Product sales |
|
29,945 |
|
|
27,773 |
|
|
67,177 |
|
|
77,881 |
Services |
|
9,823 |
|
|
15,625 |
|
|
25,441 |
|
|
36,203 |
Total |
$ |
39,768 |
|
$ |
43,398 |
|
$ |
92,618 |
|
$ |
114,084 |
|
|
|
|
|
|
|
|
|
|
|
|
NCS Multistage (NASDAQ:NCSM)
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NCS Multistage (NASDAQ:NCSM)
과거 데이터 주식 차트
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