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 construction, well completions and field
development strategies, today announced its results for the quarter
ended June 30, 2024.
Financial Review
Total revenues were $29.7 million for the quarter ended
June 30, 2024 compared to $25.4 million for
the second quarter of 2023. Increases in international
and U.S. revenues were partially offset by a decrease in
Canada revenues. The significant increase in international
revenues was driven by North Sea frac systems and Middle East
tracer work, and the increase in the United States was driven
by frac systems sales. Despite the increase in our U.S.
revenues, customer activity continues to be negatively impacted by
lower natural gas prices. The decline in our Canada revenues was
due in part to certain customers deferring planned frac systems
work into the second half of the year due to wet weather conditions
and E&P consolidation transactions.
Compared to the first quarter of 2024, total revenues decreased
by 32%, with a decrease in Canada of 62%, primarily
due to the normal seasonal decline during spring
break-up. This decrease was partially offset by an
increase in international revenues of 168%, driven
by projects in the North Sea and Middle East, and 18% in the
United States.
Gross profit was $11.3 million, or a gross margin of 38%,
for the second quarter of 2024, compared to $7.9 million, or
31%, for the second quarter of 2023. Gross margin for 2024
improved due to an increase in higher-margin
international work in both the North Sea and Middle East, higher
activity with our customers in the United States and the benefit
realized from operational restructurings enacted in
2023. Adjusted gross profit, which we define as total revenues
less total cost of sales, exclusive of depreciation and
amortization ("DD&A"), was $12.0 million, or an adjusted
gross margin of 40%, for the second quarter of 2024, compared to
$8.5 million, or 33%, for the second quarter of 2023.
Selling, general and administrative (“SG&A”) expenses
totaled $14.8 million for the second quarter of 2024, an
increase of $0.3 million compared to the same period in 2023.
This increase in expense reflects a higher annual incentive bonus
accrual year-over-year partially offset by the benefit of
cost-saving measures implemented through our
restructuring efforts in 2023.
Other income was $2.2 million for
the second quarter of 2024 compared
to $1.5 million for the second quarter of
2023. This change in other income primarily relates to an
increase in royalty income from licensees.
Net loss was $(3.1) million, or $(1.21) per
share, for the quarter ended June 30, 2024 compared to net
loss of $(32.2) million, or $(13.02) per share for
the quarter ended June 30, 2023. Our net loss for the
second quarter of 2023 was impacted by a $24.9 million
litigation provision primarily associated with a jury verdict in
Texas issued against us in early May 2023. In December 2023,
we settled the matter whereby the insurance carrier agreed to pay
the mutually-agreed settlement amounts to the plaintiff in an
amount within insurance coverage limits, with no cash impact to
NCS.
Adjusted EBITDA was $0.9 million for the quarter ended June
30, 2024, an increase of $3.2 million compared to the same
period a year ago. This improvement is primarily the result of
an increase in higher-margin international projects and an
increase in our royalty income (other income) partially offset by
an increase in SG&A expenses due to higher incentive bonus
accruals. Our resulting Adjusted EBITDA margin of 3% for the
quarter ended June 30, 2024 improved from (9)% for the
same period a year ago.
Cash flow from operating activities for the six months
ended June 30, 2024 was $4.1 million, a $5.1 million
improvement compared to the same period in 2023. For the
six months ended June 30, 2024, free cash flow, less
distributions to non-controlling interest, provided cash of
$3.2 million compared to a use of cash of $(2.0) million
for the same period in 2023. The overall increase in free
cash flow was largely attributed to our operating results,
change in net working capital, and a reduction in net cash
used in investing activities, partially offset by
a distribution to our non-controlling interest.
Liquidity and Capital Expenditures
As of June 30, 2024, NCS had $18.6 million in cash and
$8.9 million in total debt, and a borrowing base under
the undrawn asset-based revolving credit facility (“ABL
Facility”) of $14.4 million. Our working capital, defined as
current assets minus current liabilities, was $71.9 million
and $71.2 million as of June 30, 2024 and
December 31, 2023, respectively. Net working
capital, calculated in the same manner as working capital,
with the exception of excluding cash from current assets and
excluding current maturities of long-term debt from current
liabilities, was $55.4 million and $56.3 million as
of June 30, 2024 and December 31, 2023, respectively.
NCS incurred capital expenditures, net of proceeds from the sale
of property and equipment, of $0.4 million and
$1.0 million for the six months ended June 30,
2024 and 2023, respectively.
Review and Outlook
NCS’s Chief Executive Officer, Ryan Hummer commented, “NCS
continued its strong start to 2024, with our total revenue in the
second quarter near the high end of our expectations and our
Adjusted EBITDA exceeding the expectations we provided in our last
earnings call. This was led by revenue outperformance in the
U.S. and international markets, gross margin benefits from higher
international activity and increased royalty income.
Our total revenue in the second quarter of 2024 of $29.7 million
grew by $4.3 million, or 17%, compared to the second quarter
of last year. This was primarily the result of our concerted effort
to grow our international revenues in the North Sea, where we have
been growing our customer base for fracturing systems work, and the
Middle East, where we are primarily supporting our customers with
our tracer diagnostics services. Our total revenue for
the first half of 2024 of $73.5 million was 7% higher than the
year-ago period.
Our adjusted gross profit for the second quarter of 2024 of 40%,
significantly higher than 33% for the same period last
year, exceeded the high end of our second quarter
adjusted gross margin guidance. Our Adjusted EBITDA for the
second quarter of 2024 was $0.9 million, a year-over-year
improvement of $3.2 million and our Adjusted EBITDA for the
first half of 2024 was $7.0 million, a year-over-year improvement
of $4.4 million. The year-over-year improvement for the first
six months included contributions from increased revenue, higher
adjusted gross margins, lower SG&A expense and increased other
income, primarily royalty income generated from licensing of
certain intellectual property.
During the first six months of 2024, we generated free cash
flows, less distributions to our non-controlling interest, of
$3.2 million, an increase of $5.2 million to the same period
one year ago. This has further strengthened our balance sheet,
as our cash balance as of June 30, 2024 is up to $18.6
million, with only $8.9 million of total debt which consisted
entirely of finance leases.
We believe that average 2024 industry drilling and completion
activity in Canada will be flat to slightly higher compared to
2023 and activity in the United States will decline on average by
5% to 10% compared to 2023. We expect international
industry activity to improve on average by approximately
5% in 2024 compared to 2023.
For the third quarter, we expect revenues to improve
year-over-year and sequentially. The year-over-year expected
revenue increase is driven by an increase in international revenues
and increased sales at Repeat Precision in the U.S. The
sequential improvement will be driven by our Canada operations as
customer activity increases following the seasonal spring break-up
in the second quarter, offset by modest sequential declines in our
U.S. and international operations.
We believe the value that we bring to our customers across our
product and service portfolio, our continued product and service
innovation, and our targeted efforts to penetrate international
markets positions us to outperform the anticipated changes in
industry drilling and completion activity, and to grow our revenue
in 2024 as compared to 2023. As we demonstrated during the first
half of 2024, we believe that this revenue growth, paired with
previously enacted and continued efforts to control our operating
expenses, will enable higher year-over-year Adjusted EBITDA
Margins.
These results reflect the talent, effort and dedication of the
outstanding team at NCS and at Repeat Precision. We are delivering
on our core strategies to build upon our leading market positions,
capitalize on opportunities in international and offshore markets
and to bring new and innovative solutions to our customers around
the world. Through these strategies, we are delivering
extraordinary outcomes to our customers, driving innovation in the
industry and creating value for our shareholders.”
EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted EBITDA
Less Share-Based Compensation, Adjusted Net (Loss) Income, Adjusted
(Loss) Earnings per Diluted Share, Adjusted Gross Profit,
Adjusted Gross Margin, Free Cash Flow, Free Cash Flow Less
Distributions to Non-Controlling Interest and Net Working Capital
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 2024 results and updated guidance on
Thursday, August 1, 2024 at 7:30 a.m. Central Time
(8:30 a.m. Eastern Time). The conference call will be
available via a live audio webcast. Participants who wish to ask
questions may register for the call here to receive the
dial-in numbers and unique PIN. If you wish to join the conference
call but do not plan to ask questions, you may join the listen-only
webcast here. The live webcast can also be accessed by visiting the
Investors section of the Company’s website at ir.ncsmultistage.com.
It is recommended that participants join at least 10 minutes prior
to the event start.
The replay will 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 construction, well
completions and field development strategies. NCS provides products
and services primarily to exploration and production companies for
use in onshore and offshore wells, predominantly wells that have
been drilled with horizontal laterals in both unconventional and
conventional oil and natural gas formations. NCS’s products and
services are utilized in oil and natural gas basins throughout
North America and in selected international markets, including the
North Sea, the Middle East, Argentina and China. NCS’s common stock
is traded on the Nasdaq Capital 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 in Canada, the United States and
internationally; oil and natural gas price fluctuations;
significant competition for our products and services that results
in pricing pressures, reduced sales, or reduced market share;
inability to successfully implement our strategy of increasing
sales of products and services into the U.S. and international
markets; loss of significant customers; losses and liabilities from
uninsured or underinsured business activities and litigation; our
failure to identify and consummate potential acquisitions; the
financial health of our customers including their ability to pay
for products or services provided; our inability to integrate or
realize the expected benefits from acquisitions; our inability to
achieve suitable price increases to offset the impacts of cost
inflation; loss of any of our key suppliers or significant
disruptions negatively impacting our supply chain; risks in
attracting and retaining qualified employees and key personnel;
risks resulting from the operations of our joint venture
arrangement; currency exchange rate fluctuations; impact of severe
weather conditions; our inability to accurately predict customer
demand, which may result in us holding excess or obsolete
inventory; impairment in the carrying value of long-lived assets
including goodwill; failure to comply with or changes to federal,
state and local and non-U.S. laws and other regulations, including
anti-corruption and environmental regulations, guidelines and
regulations for the use of explosives; change in trade policy,
including the impact of tariffs; our inability to successfully
develop and implement new technologies, products and services that
align with the needs of our customers, including addressing the
shift to more non-traditional energy markets as part of the energy
transition; our inability to protect and maintain critical
intellectual property assets or losses and liabilities from adverse
decisions in intellectual property disputes; loss of, or
interruption to, our information and computer systems; system
interruptions or failures, including complications with our
enterprise resource planning system, cybersecurity breaches,
identity theft or other disruptions that could compromise our
information; our failure to establish and maintain effective
internal control over financial reporting; restrictions on the
availability of our customers to obtain water essential to the
drilling and hydraulic fracturing processes; changes in legislation
or regulation governing the oil and natural gas industry, including
restrictions on emissions of greenhouse gases; our inability to
meet regulatory requirements for use of certain chemicals by our
tracer diagnostics business; the reduction in our ABL Facility
borrowing base or our inability to comply with the covenants in our
debt agreements; and our inability to obtain sufficient liquidity
on reasonable terms, or at all 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
Mike MorrisonChief Financial Officer and Treasurer(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, |
|
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product sales |
|
$ |
19,022 |
|
|
$ |
17,433 |
|
|
$ |
50,780 |
|
|
$ |
48,863 |
|
Services |
|
|
10,668 |
|
|
|
7,958 |
|
|
|
22,768 |
|
|
|
20,082 |
|
Total revenues |
|
|
29,690 |
|
|
|
25,391 |
|
|
|
73,548 |
|
|
|
68,945 |
|
Cost of
sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of product sales,
exclusive of depreciation and amortization expense shown below |
|
|
12,209 |
|
|
|
11,994 |
|
|
|
31,901 |
|
|
|
30,827 |
|
Cost of services, exclusive of
depreciation and amortization expense shown below |
|
|
5,510 |
|
|
|
4,935 |
|
|
|
12,105 |
|
|
|
11,115 |
|
Total cost of sales, exclusive of depreciation and amortization
expense shown below |
|
|
17,719 |
|
|
|
16,929 |
|
|
|
44,006 |
|
|
|
41,942 |
|
Selling, general and
administrative expenses |
|
|
14,820 |
|
|
|
14,477 |
|
|
|
28,650 |
|
|
|
30,628 |
|
Depreciation |
|
|
1,134 |
|
|
|
948 |
|
|
|
2,207 |
|
|
|
1,891 |
|
Amortization |
|
|
167 |
|
|
|
167 |
|
|
|
334 |
|
|
|
334 |
|
Loss from operations |
|
|
(4,150 |
) |
|
|
(7,130 |
) |
|
|
(1,649 |
) |
|
|
(5,850 |
) |
Other income
(expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
(115 |
) |
|
|
(211 |
) |
|
|
(215 |
) |
|
|
(420 |
) |
Provision for litigation, net
of recoveries |
|
|
— |
|
|
|
(24,886 |
) |
|
|
— |
|
|
|
(42,400 |
) |
Other income, net |
|
|
2,203 |
|
|
|
1,478 |
|
|
|
3,340 |
|
|
|
1,770 |
|
Foreign currency exchange
(loss) gain |
|
|
(507 |
) |
|
|
23 |
|
|
|
(1,005 |
) |
|
|
78 |
|
Total other income (expense) |
|
|
1,581 |
|
|
|
(23,596 |
) |
|
|
2,120 |
|
|
|
(40,972 |
) |
(Loss) income before income tax |
|
|
(2,569 |
) |
|
|
(30,726 |
) |
|
|
471 |
|
|
|
(46,822 |
) |
Income tax expense |
|
|
270 |
|
|
|
1,350 |
|
|
|
757 |
|
|
|
250 |
|
Net loss |
|
|
(2,839 |
) |
|
|
(32,076 |
) |
|
|
(286 |
) |
|
|
(47,072 |
) |
Net income attributable to
non-controlling interest |
|
|
256 |
|
|
|
155 |
|
|
|
739 |
|
|
|
128 |
|
Net loss attributable
to NCS Multistage Holdings, Inc. |
|
$ |
(3,095 |
) |
|
$ |
(32,231 |
) |
|
$ |
(1,025 |
) |
|
$ |
(47,200 |
) |
Loss per common
share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic loss per common share attributable to NCS Multistage
Holdings, Inc. |
|
$ |
(1.21 |
) |
|
$ |
(13.02 |
) |
|
$ |
(0.41 |
) |
|
$ |
(19.16 |
) |
Diluted loss per common share attributable to NCS Multistage
Holdings, Inc. |
|
$ |
(1.21 |
) |
|
$ |
(13.02 |
) |
|
$ |
(0.41 |
) |
|
$ |
(19.16 |
) |
Weighted average
common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
2,548 |
|
|
|
2,476 |
|
|
|
2,528 |
|
|
|
2,464 |
|
Diluted |
|
|
2,548 |
|
|
|
2,476 |
|
|
|
2,528 |
|
|
|
2,464 |
|
NCS MULTISTAGE HOLDINGS, INC.CONDENSED
CONSOLIDATED BALANCE SHEETS*(In thousands, except share
data)(Unaudited) |
|
|
June 30, |
|
|
December 31, |
|
|
|
2024 |
|
|
2023 |
|
Assets |
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
18,614 |
|
|
$ |
16,720 |
|
Accounts receivable—trade, net |
|
|
24,505 |
|
|
|
23,981 |
|
Inventories, net |
|
|
41,563 |
|
|
|
41,612 |
|
Prepaid expenses and other current assets |
|
|
3,206 |
|
|
|
1,862 |
|
Other current receivables |
|
|
3,958 |
|
|
|
4,042 |
|
Insurance receivable |
|
|
— |
|
|
|
15,000 |
|
Total current assets |
|
|
91,846 |
|
|
|
103,217 |
|
Noncurrent assets |
|
|
|
|
|
|
|
|
Property and equipment, net |
|
|
23,147 |
|
|
|
23,336 |
|
Goodwill |
|
|
15,222 |
|
|
|
15,222 |
|
Identifiable intangibles, net |
|
|
4,073 |
|
|
|
4,407 |
|
Operating lease assets |
|
|
4,056 |
|
|
|
4,847 |
|
Deposits and other assets |
|
|
823 |
|
|
|
937 |
|
Deferred income taxes, net |
|
|
198 |
|
|
|
66 |
|
Total noncurrent assets |
|
|
47,519 |
|
|
|
48,815 |
|
Total assets |
|
$ |
139,365 |
|
|
$ |
152,032 |
|
Liabilities and
Stockholders’ Equity |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
Accounts payable—trade |
|
$ |
7,567 |
|
|
$ |
6,227 |
|
Accrued expenses |
|
|
5,406 |
|
|
|
3,702 |
|
Income taxes payable |
|
|
736 |
|
|
|
364 |
|
Operating lease liabilities |
|
|
1,471 |
|
|
|
1,583 |
|
Accrual for legal contingencies |
|
|
— |
|
|
|
15,000 |
|
Current maturities of long-term debt |
|
|
2,074 |
|
|
|
1,812 |
|
Other current liabilities |
|
|
2,679 |
|
|
|
3,370 |
|
Total current liabilities |
|
|
19,933 |
|
|
|
32,058 |
|
Noncurrent liabilities |
|
|
|
|
|
|
|
|
Long-term debt, less current maturities |
|
|
6,828 |
|
|
|
6,344 |
|
Operating lease liabilities, long-term |
|
|
2,994 |
|
|
|
3,775 |
|
Other long-term liabilities |
|
|
199 |
|
|
|
213 |
|
Deferred income taxes, net |
|
|
372 |
|
|
|
249 |
|
Total noncurrent liabilities |
|
|
10,393 |
|
|
|
10,581 |
|
Total liabilities |
|
|
30,326 |
|
|
|
42,639 |
|
Commitments and
contingencies |
|
|
|
|
|
|
|
|
Stockholders’ equity |
|
|
|
|
|
|
|
|
Preferred stock, $0.01 par value, 10,000,000 shares authorized, no
shares issued and outstanding at June 30, 2024 and December 31,
2023 |
|
|
— |
|
|
|
— |
|
Common stock, $0.01 par value, 11,250,000 shares authorized,
2,557,482 shares issued and 2,502,564 shares outstanding at June
30, 2024 and 2,482,796 shares issued and 2,443,744 shares
outstanding at December 31, 2023 |
|
|
26 |
|
|
|
25 |
|
Additional paid-in capital |
|
|
446,070 |
|
|
|
444,638 |
|
Accumulated other comprehensive loss |
|
|
(86,516 |
) |
|
|
(85,752 |
) |
Retained deficit |
|
|
(266,642 |
) |
|
|
(265,617 |
) |
Treasury stock, at cost, 54,918 shares at June 30, 2024 and 39,052
shares at December 31, 2023 |
|
|
(1,913 |
) |
|
|
(1,676 |
) |
Total stockholders' equity |
|
|
91,025 |
|
|
|
91,618 |
|
Non-controlling interest |
|
|
18,014 |
|
|
|
17,775 |
|
Total equity |
|
|
109,039 |
|
|
|
109,393 |
|
Total liabilities and stockholders' equity |
|
$ |
139,365 |
|
|
$ |
152,032 |
|
_____________________
NCS MULTISTAGE HOLDINGS, INC.CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS(In
thousands)(Unaudited) |
|
Six Months Ended |
|
|
June 30, |
|
|
2024 |
|
2023 |
|
Cash flows from operating activities |
|
|
|
|
|
|
Net loss |
$ |
(286 |
) |
$ |
(47,072 |
) |
Adjustments to reconcile net
loss to net cash provided by (used in) operating activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
2,541 |
|
|
2,225 |
|
Amortization of deferred loan costs |
|
103 |
|
|
102 |
|
Share-based compensation |
|
2,062 |
|
|
2,542 |
|
Provision for inventory obsolescence |
|
679 |
|
|
245 |
|
Deferred income tax expense |
|
21 |
|
|
57 |
|
Gain on sale of property and equipment |
|
(340 |
) |
|
(333 |
) |
(Recovery of) provision for credit losses |
|
(5 |
) |
|
58 |
|
Provision for litigation, net of recoveries |
|
— |
|
|
42,400 |
|
Net foreign currency unrealized loss (gain) |
|
956 |
|
|
(279 |
) |
Proceeds from note receivable |
|
61 |
|
|
271 |
|
Changes in operating assets
and liabilities: |
|
|
|
|
|
|
Accounts receivable—trade |
|
(1,024 |
) |
|
5,759 |
|
Inventories, net |
|
(1,501 |
) |
|
(5,907 |
) |
Prepaid expenses and other assets |
|
(619 |
) |
|
552 |
|
Accounts payable—trade |
|
1,353 |
|
|
545 |
|
Accrued expenses |
|
1,761 |
|
|
(4 |
) |
Other liabilities |
|
(2,092 |
) |
|
(2,078 |
) |
Income taxes receivable/payable |
|
429 |
|
|
(125 |
) |
Net cash provided by (used in) operating activities |
|
4,099 |
|
|
(1,042 |
) |
Cash flows from
investing activities |
|
|
|
|
|
|
Purchases of property and
equipment |
|
(633 |
) |
|
(1,151 |
) |
Purchase and development of
software and technology |
|
(53 |
) |
|
(167 |
) |
Proceeds from sales of
property and equipment |
|
293 |
|
|
340 |
|
Net cash used in investing activities |
|
(393 |
) |
|
(978 |
) |
Cash flows from
financing activities |
|
|
|
|
|
|
Payments on finance
leases |
|
(932 |
) |
|
(743 |
) |
Line of credit borrowings |
|
2,974 |
|
|
8,397 |
|
Payments of line of credit
borrowings |
|
(2,974 |
) |
|
(7,663 |
) |
Treasury shares withheld |
|
(237 |
) |
|
(264 |
) |
Distribution to noncontrolling
interest |
|
(500 |
) |
|
— |
|
Net cash used in financing activities |
|
(1,669 |
) |
|
(273 |
) |
Effect of exchange rate
changes on cash and cash equivalents |
|
(143 |
) |
|
(195 |
) |
Net change in cash and cash equivalents |
|
1,894 |
|
|
(2,488 |
) |
Cash and cash equivalents
beginning of period |
|
16,720 |
|
|
16,234 |
|
Cash and cash equivalents end
of period |
$ |
18,614 |
|
$ |
13,746 |
|
Noncash investing and
financing activities |
|
|
|
|
|
|
Assets obtained in exchange
for new finance lease liabilities |
$ |
1,821 |
|
$ |
845 |
|
Assets obtained in exchange
for new operating lease liabilities |
$ |
— |
|
$ |
1,789 |
|
NCS MULTISTAGE HOLDINGS, INC.REVENUES BY
GEOGRAPHIC AREA(In
thousands)(Unaudited) |
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
United States |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product sales |
|
$ |
8,550 |
|
|
$ |
6,942 |
|
|
$ |
16,317 |
|
|
$ |
15,002 |
|
Services |
|
|
3,241 |
|
|
|
2,440 |
|
|
|
5,485 |
|
|
|
5,699 |
|
Total United States |
|
|
11,791 |
|
|
|
9,382 |
|
|
|
21,802 |
|
|
|
20,701 |
|
Canada |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product sales |
|
|
8,263 |
|
|
|
9,970 |
|
|
|
30,938 |
|
|
|
32,531 |
|
Services |
|
|
3,795 |
|
|
|
4,351 |
|
|
|
12,789 |
|
|
|
12,461 |
|
Total Canada |
|
|
12,058 |
|
|
|
14,321 |
|
|
|
43,727 |
|
|
|
44,992 |
|
Other
Countries |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product sales |
|
|
2,209 |
|
|
|
521 |
|
|
|
3,525 |
|
|
|
1,330 |
|
Services |
|
|
3,632 |
|
|
|
1,167 |
|
|
|
4,494 |
|
|
|
1,922 |
|
Total other countries |
|
|
5,841 |
|
|
|
1,688 |
|
|
|
8,019 |
|
|
|
3,252 |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product sales |
|
|
19,022 |
|
|
|
17,433 |
|
|
|
50,780 |
|
|
|
48,863 |
|
Services |
|
|
10,668 |
|
|
|
7,958 |
|
|
|
22,768 |
|
|
|
20,082 |
|
Total revenues |
|
$ |
29,690 |
|
|
$ |
25,391 |
|
|
$ |
73,548 |
|
|
$ |
68,945 |
|
NCS MULTISTAGE HOLDINGS,
INC.RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL
INFORMATION(In thousands, except per share
data)(Unaudited)
Non-GAAP Financial Measures
EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted EBITDA
Less Share-Based Compensation, Adjusted Net (Loss) Income, Adjusted
(Loss) Earnings per Diluted Share, Adjusted Gross Profit, Adjusted
Gross Margin, Free Cash Flow, Free Cash Flow Less Distributions to
Non-Controlling Interest and Net Working Capital (our “non-GAAP
financial measures”) are not defined under generally accepted
accounting principles (“GAAP”), are not measures of net (loss)
income, (loss) income from operations, gross profit and gross
margin (inclusive of DD&A), cash provided by (used in)
operating activities, working capital 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 (loss) income, (loss) income
from operations, gross profit, gross margin, cash provided by (used
in) operating activities, working capital 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.
However, EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin,
Adjusted EBITDA Less Share-Based Compensation, Adjusted Net (Loss)
Income, Adjusted (Loss) Earnings per Diluted Share, Adjusted
Gross Profit, Adjusted Gross Margin, Free Cash Flow, Free Cash Flow
Less Distributions to Non-Controlling Interest and Net Working
Capital are key metrics that management uses to assess the
period-to-period performance of our core business operations or
metrics that enable investors to assess our performance from period
to period to evaluate our performance relative to other companies
that are not subject to such factors, or who may provide similar
non-GAAP measures in their public disclosures.
The tables below set forth reconciliations of our non-GAAP
financial measures to the most directly comparable measures of
financial performance calculated under GAAP:
NET WORKING CAPITAL*
Net working capital is defined as total current assets,
excluding cash and cash equivalents, minus total current
liabilities, excluding current maturities of long-term debt.
Net working capital excludes cash and cash equivalents and current
maturities of long-term debt in order to evaluate the investments
in working capital that we believe are required to support our
business. We believe that net working capital is useful in
analyzing the cash flow and working capital needs of the Company,
including determining the efficiencies of our operations and our
ability to readily convert assets into cash.
|
|
June 30, |
|
|
December 31, |
|
|
|
2024 |
|
|
2023 |
|
Working capital |
|
$ |
71,913 |
|
|
$ |
71,159 |
|
Cash and cash equivalents |
|
|
(18,614 |
) |
|
|
(16,720 |
) |
Current maturities of long
term debt |
|
|
2,074 |
|
|
|
1,812 |
|
Net working capital |
|
$ |
55,373 |
|
|
$ |
56,251 |
|
_____________________
NCS MULTISTAGE HOLDINGS,
INC.RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL
INFORMATION(In thousands, except per share
data)(Unaudited)
ADJUSTED GROSS PROFIT AND ADJUSTED GROSS
MARGIN
Adjusted gross profit is defined as total revenues minus cost of
sales, exclusive of depreciation and amortization expense, which we
present as a separate line item in our statement of operations.
Adjusted gross margin represents adjusted gross profit as a
percentage of total revenues.
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Total revenues |
|
$ |
29,690 |
|
|
$ |
25,391 |
|
|
$ |
73,548 |
|
|
$ |
68,945 |
|
Total cost of sales, exclusive
of depreciation and amortization expense |
|
|
17,719 |
|
|
|
16,929 |
|
|
|
44,006 |
|
|
|
41,942 |
|
Total depreciation and
amortization associated with cost of sales |
|
|
653 |
|
|
|
527 |
|
|
|
1,269 |
|
|
|
1,043 |
|
Gross
Profit |
|
$ |
11,318 |
|
|
$ |
7,935 |
|
|
$ |
28,273 |
|
|
$ |
25,960 |
|
Gross
Margin |
|
|
38.1 |
% |
|
|
31.3 |
% |
|
|
38.4 |
% |
|
|
37.7 |
% |
Exclude total depreciation and
amortization associated with cost of sales |
|
|
(653 |
) |
|
|
(527 |
) |
|
|
(1,269 |
) |
|
|
(1,043 |
) |
Adjusted Gross
Profit |
|
$ |
11,971 |
|
|
$ |
8,462 |
|
|
$ |
29,542 |
|
|
$ |
27,003 |
|
Adjusted Gross
Margin |
|
|
40.3 |
% |
|
|
33.3 |
% |
|
|
40.2 |
% |
|
|
39.2 |
% |
ADJUSTED NET LOSS AND ADJUSTED
LOSS PER DILUTED SHARE
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 (loss) income per diluted share
is defined as adjusted net (loss) income divided by our
diluted weighted average common shares outstanding during the
relevant period.
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, 2024 |
|
|
June 30, 2023 |
|
|
June 30, 2024 |
|
|
June 30, 2023 |
|
|
|
Effect onNet Loss |
|
|
Impact onDilutedLoss PerShare |
|
|
Effect onNet Loss |
|
|
Impact onDilutedLoss PerShare |
|
|
Effect onNet Loss |
|
|
Impact onDilutedLoss PerShare |
|
|
Effect onNet Loss |
|
|
Impact onDilutedLoss PerShare |
|
Net loss attributable to NCS Multistage Holdings, Inc. |
|
$ |
(3,095 |
) |
|
$ |
(1.21 |
) |
|
$ |
(32,231 |
) |
|
$ |
(13.02 |
) |
|
$ |
(1,025 |
) |
|
$ |
(0.41 |
) |
|
$ |
(47,200 |
) |
|
$ |
(19.16 |
) |
Adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for litigation, net of recoveries (a) |
|
|
— |
|
|
|
— |
|
|
|
24,886 |
|
|
|
10.05 |
|
|
|
— |
|
|
|
— |
|
|
|
42,400 |
|
|
|
17.21 |
|
Foreign currency exchange loss (gain) (b) |
|
|
432 |
|
|
|
0.17 |
|
|
|
(48 |
) |
|
|
(0.02 |
) |
|
|
941 |
|
|
|
0.37 |
|
|
|
(105 |
) |
|
|
(0.04 |
) |
Income tax impact from adjustments (c) |
|
|
44 |
|
|
|
0.01 |
|
|
|
1,197 |
|
|
|
0.49 |
|
|
|
(1,301 |
) |
|
|
(0.51 |
) |
|
|
288 |
|
|
|
0.12 |
|
Adjusted net loss
attributable to NCS Multistage Holdings, Inc. |
|
$ |
(2,619 |
) |
|
$ |
(1.03 |
) |
|
$ |
(6,196 |
) |
|
$ |
(2.50 |
) |
|
$ |
(1,385 |
) |
|
$ |
(0.55 |
) |
|
$ |
(4,617 |
) |
|
$ |
(1.87 |
) |
__________________
(a) |
Represents litigation provision
primarily associated with a legal matter in Texas. In
December 2023, we settled the matter where the insurance carrier
agreed to pay the mutually-agreed settlement amounts to the
plaintiff in January 2024, resulting in no cash payments by
NCS. |
(b) |
Represents realized and
unrealized foreign currency exchange gains and losses
attributable to NCS Multistage Holdings, Inc. primarily due to
movement in the foreign currency exchange rates during the
applicable periods. |
(c) |
Represents income tax impacts
based on applicable effective tax rates. |
NCS MULTISTAGE HOLDINGS,
INC.RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL
INFORMATION(In thousands)
(Unaudited)
EBITDA, ADJUSTED EBITDA, ADJUSTED EBITDA
MARGIN, AND ADJUSTED EBITDA LESS SHARE-BASED
COMPENSATION
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 share-based compensation, is
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. We believe that Adjusted EBITDA
is an important measure that excludes costs that management
believes do not reflect our ongoing operating performance, legal
proceedings for intellectual property as further described below,
and 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 periodically incur legal costs associated with the assertion
of, or defense of, intellectual property, which we exclude from our
definition of Adjusted EBITDA and Adjusted EBITDA Less Share-Based
Compensation, unless we believe that settlement will occur prior to
any material legal spend (included in the table below as
“Professional Fees”). Although these costs may recur between
periods, depending on legal matters then outstanding or in process,
we believe the timing of when these costs are incurred does not
typically match the settlement or recoveries associated with such
matters, and therefore, can distort our operating results.
Similarly, we exclude from Adjusted EBITDA and Adjusted EBITDA Less
Share-Based Compensation the one-time settlement or recovery
payment associated with these excluded legal matters when realized
but would not exclude any go forward royalties or payments, if
applicable. We expect to continue to incur these legal costs for
current matters under appeal and for any future cases that may go
to trial, provided that the amount will vary by period.
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Net loss |
|
$ |
(2,839 |
) |
|
$ |
(32,076 |
) |
|
$ |
(286 |
) |
|
$ |
(47,072 |
) |
Income tax expense |
|
|
270 |
|
|
|
1,350 |
|
|
|
757 |
|
|
|
250 |
|
Interest expense, net |
|
|
115 |
|
|
|
211 |
|
|
|
215 |
|
|
|
420 |
|
Depreciation |
|
|
1,134 |
|
|
|
948 |
|
|
|
2,207 |
|
|
|
1,891 |
|
Amortization |
|
|
167 |
|
|
|
167 |
|
|
|
334 |
|
|
|
334 |
|
EBITDA |
|
|
(1,153 |
) |
|
|
(29,400 |
) |
|
|
3,227 |
|
|
|
(44,177 |
) |
Provision for litigation, net
of recoveries (a) |
|
|
— |
|
|
|
24,886 |
|
|
|
— |
|
|
|
42,400 |
|
Share-based compensation
(b) |
|
|
667 |
|
|
|
1,044 |
|
|
|
1,433 |
|
|
|
1,957 |
|
Professional fees (c) |
|
|
677 |
|
|
|
577 |
|
|
|
930 |
|
|
|
1,661 |
|
Foreign currency exchange loss
(gain) (d) |
|
|
507 |
|
|
|
(23 |
) |
|
|
1,005 |
|
|
|
(78 |
) |
Severance and other
termination benefits (e) |
|
|
— |
|
|
|
309 |
|
|
|
— |
|
|
|
309 |
|
Other (f) |
|
|
218 |
|
|
|
362 |
|
|
|
398 |
|
|
|
553 |
|
Adjusted EBITDA |
|
$ |
916 |
|
|
$ |
(2,245 |
) |
|
$ |
6,993 |
|
|
$ |
2,625 |
|
Adjusted EBITDA Margin |
|
|
3 |
% |
|
|
(9 |
%) |
|
|
10 |
% |
|
|
4 |
% |
Adjusted EBITDA Less Share-Based Compensation |
|
$ |
249 |
|
|
$ |
(3,289 |
) |
|
$ |
5,560 |
|
|
$ |
668 |
|
___________________
(a) |
Represents litigation provision
primarily associated with a legal matter in Texas. See
footnote (a) in the “Adjusted Net Loss and Adjusted
Loss Earnings per Diluted Share” table above for more
information. |
(b) |
Represents non-cash compensation
charges related to share-based compensation granted to our
officers, employees and directors. |
(c) |
Represents non-capitalizable
costs of professional services primarily incurred or reversed in
connection with our legal proceedings associated with the assertion
of, or defense of, intellectual property as further described above
as well as the valuation of potential strategic
transactions. |
(d) |
Represents realized and
unrealized foreign currency exchange gains and losses
primarily due to movement in the foreign currency exchange rates
during the applicable periods. |
(e) |
Represents certain expenses
associated with consolidations of our tracer diagnostics business
operations and Repeat Precision's manufacturing operations in
Mexico. |
(f) |
Represents the impact of a
research and development subsidy that is included in income tax
expense in accordance with GAAP along with other charges and
credits. |
NCS MULTISTAGE HOLDINGS,
INC.RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL
INFORMATION(In thousands)
(Unaudited)
FREE CASH FLOW AND FREE CASH FLOW LESS
DISTRIBUTIONS TO NON-CONTROLLING INTEREST
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 define
free cash flow less distributions to non-controlling interest as
free cash flow less amounts reported in the financing activities
section of the statement of cash flows as distributions to
non-controlling interest. 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. We
believe that free cash flow less distributions to non-controlling
interest 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, other
investment needs, and cash distributions to our joint venture
partner.
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
|
2024 |
|
|
2023 |
|
Net cash provided by (used in) operating activities |
|
$ |
4,099 |
|
|
$ |
(1,042 |
) |
Purchases of property and
equipment |
|
|
(633 |
) |
|
|
(1,151 |
) |
Purchase and development of
software and technology |
|
|
(53 |
) |
|
|
(167 |
) |
Proceeds from sales of
property and equipment |
|
|
293 |
|
|
|
340 |
|
Free cash
flow |
|
$ |
3,706 |
|
|
$ |
(2,020 |
) |
Distributions to
non-controlling interest |
|
|
(500 |
) |
|
|
— |
|
Free cash flow less
distributions to non-controlling interest |
|
$ |
3,206 |
|
|
$ |
(2,020 |
) |
NCS Multistage (NASDAQ:NCSM)
과거 데이터 주식 차트
부터 7월(7) 2024 으로 8월(8) 2024
NCS Multistage (NASDAQ:NCSM)
과거 데이터 주식 차트
부터 8월(8) 2023 으로 8월(8) 2024