NCS Multistage Holdings, Inc. (NASDAQ:NCSM) reported its Q3 2023 earnings, with CEO Ryan Hummer spotlighting the company’s resilience despite revenue declines. They emphasized the company's strategic achievements, financial flexibility, and commitment to stakeholders, which have been instrumental in maintaining gross profit margins amidst challenging market conditions.
Key takeaways from the earnings call include:
- NCS Multistage reported a 22% year-on-year decrease in Q3 revenues, with declines across Canada, the US, and international markets. However, the company saw a 51% sequential increase in revenues, led by a near 100% rise in Canada.
- Gross profit stood at $15.7 million, translating to a gross profit percentage of 41%. Selling, general, and administrative costs were down by $2.7 million year-on-year.
- The company reported a net income of $4.4 million for Q3, a notable improvement from the previous year.
- NCS Multistage expects Q4 revenues to fall between $37 million and $41 million, with a gross margin percentage of 40% to 42%. Adjusted EBITDA is projected to be between $4 million and $6 million.
- Despite market challenges, the company remains optimistic about long-term growth prospects, citing advancements in technology for deepwater applications and success in international markets, particularly in the Middle East.
During the call, Hummer highlighted the company's progress in advancing its long-term corporate strategy, which includes building on leading market positions, capitalizing on international and offshore opportunities, and commercializing innovative solutions. Notable achievements in the quarter included successful installations of sliding sleeves in Canada and advancements in fracturing systems technology for deepwater offshore applications.
Despite revenue declines due to commodity price volatility and lower natural gas prices, NCS Multistage managed to maintain its gross profit margins through improved pricing and cost management strategies. The company’s net income and adjusted EBITDA for Q3 showed improvement compared to the previous year, demonstrating financial resilience.
The company also highlighted its commitment to financial flexibility and upholding its promise to stakeholders. This commitment was evidenced by their recent settlement of legal matters and the release of their inaugural ESG report.
In terms of international expansion, the company has made significant strides in the Middle East market, particularly in Oman and with Saudi Aramco (TADAWUL:2222). They have secured a long-term contract in Oman and are in the middle phase of qualifying in the Saudi Aramco catalog, which would allow them to participate in multiyear tenders.
CEO Hummer and CFO Mike Morrison attributed the company's strong EBITDA despite decreased revenues to continuous improvement initiatives, facility rationalizations, and the merging of the supply chain and technical services teams. They expressed confidence that these improvements will contribute to strong incremental margins and average margin growth when revenue growth resumes.
The company concluded the call by expressing gratitude to shareholders, analysts, and employees for their continued support and commitment. Despite the challenges in the market, NCS Multistage remains optimistic about its long-term growth prospects and believes it is well-positioned for future success.
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