NCS Multistage Holdings’ Earnings Call: Mixed Sentiments and Future Prospects

NCS Multistage Holdings’ recent earnings call painted a mixed picture, reflecting both significant achievements and notable challenges. On the positive side, the company reported substantial revenue growth in the U.S. and a successful integration of ResMetrix. However, concerns were raised regarding the Canadian market and potential oversupply issues in the oil market, which could impact future performance. Revenue Growth in the U.S. NCS Multistage Holdings reported a robust increase in U.S. revenue, which rose by 26% sequentially and 54% compared to the same quarter last year, excluding ResMetrix. This represents a 37% improvement year-over-year, highlighting the company’s strong performance in the U.S. market. Successful ResMetrix Integration The integration of ResMetrix has been a success, with the company realizing early synergies. These include cost savings in insurance and fleet management, as well as improved operational performance, contributing positively to the company’s overall efficiency. Legal Victory in Canada In a significant legal development, the Federal Court of Appeal overturned a prior judgment against NCS, remanding the case back to trial. This decision opens the possibility for cost reimbursement improvements, which could benefit the company’s financial standing in Canada. Cash Flow Improvement NCS Multistage Holdings reported an improvement in free cash flow by $6.5 million compared to the same period last year. As of September 30, 2025, the company’s total cash balance exceeded $25 million, indicating a strong cash position. Adjusted EBITDA Growth The company achieved a 24% year-over-year increase in adjusted EBITDA for the first nine months of 2025, reaching $17.5 million. This growth underscores the company’s ability to enhance profitability despite market challenges. Decline in Canadian Revenue Canadian revenue saw a decline of 19%, attributed to a general slowdown in activity levels and lower rig counts. This downturn poses a challenge for NCS in maintaining its market share in Canada. Market Challenges NCS faces several market challenges, including a stagnating U.S. rig count, double-digit activity declines in Canada, and delays in unconventional jobs in Saudi Arabia. These factors could potentially hinder the company’s growth prospects. Potential Oil Market Oversupply Concerns were raised about a potential oversupply in the oil market, driven by increased OPEC+ supply and ongoing trade uncertainties. This situation could impact oil prices and, consequently, NCS’s operations. Forward-Looking Guidance Looking ahead, NCS Multistage Holdings provided guidance for the fourth quarter, projecting total revenue between $41 million and $45 million. Canadian revenue is expected to be in the range of $23 million to $25 million, while U.S. revenue, including ResMetrix, is anticipated to be between $15 million and $16 million. The company also forecasts an adjusted gross margin of 40% to 42% and adjusted EBITDA ranging from $5 million to $6.5 million. For the full year of 2025, total revenue is estimated to be between $174 million and $178 million, with adjusted EBITDA expected to range from $22.5 million to $24 million. In summary, NCS Multistage Holdings’ earnings call highlighted a mixed sentiment, with strong U.S. revenue growth and successful ResMetrix integration offset by challenges in the Canadian market and potential oil market oversupply. The company’s forward-looking guidance reflects cautious optimism, with expectations of continued revenue growth and improved cash flow. Investors will be keen to see how NCS navigates these challenges and capitalizes on its growth opportunities in the coming quarters.