NCS Multistage Q1 Earnings Call Highlights

Key Points

• Q1 revenue was $45.6 million, down 9% year‑over‑year and more than $5 million below guidance due chiefly to weather and timing disruptions in Canada, producing a net loss of $0.4 million and adjusted EBITDA of $5.6 million; U.S. revenue more than doubled year‑over‑year.
• Balance sheet and guidance: NCS exited Q1 with about $34.5 million cash and >$27 million net cash plus $53 million total liquidity, modestly raised its 2026 revenue midpoint to $186–$194 million while maintaining adjusted EBITDA guidance of $26–$29 million, and guided Q2 revenue to $36–$39 million with EBITDA breakeven to $2 million.
• Operational priorities include increased 2026 capex to $2.2–$2.8 million to expand Repeat Precision manufacturing, ongoing integration and revenue contribution from ResMetrics, and pursuit of new opportunities including a potential deepwater Gulf of Mexico sleeve delivery in late 2026/early 2027.

NCS Multistage NASDAQ: NCSM reported first-quarter 2026 revenue of $45.6 million, a 9% decline from the prior-year period and more than $5 million below the midpoint of its prior guidance, as management cited weather-driven disruptions and customer timing shifts—particularly in Canada—as the primary drivers of the shortfall.

Q1 results: Canada weakness offset by U.S. growth

CEO Ryan Hummer said the revenue miss was “concentrated in Canada with the balance from international,” pointing to “challenging weather conditions in March in southern Alberta and Saskatchewan” and an “earlier than expected onset of spring breakup.” Hummer also said some customers deferred activity into later periods or encountered drilling issues that delayed sleeve installations, which impacts when NCS recognizes revenue.

Despite the softer quarter, Hummer highlighted strength in the U.S. business. “A high point for the quarter for us was our U.S. revenue, which improved by over 100% year-over-year and by 6% as compared to the fourth quarter of 2025,” he said.

CFO Mike Morrison provided additional geographic detail. He said U.S. revenue “more than doubled year-over-year,” international revenue rose 13%, and Canada revenue fell 38%. The U.S. increase was described as broad-based and driven by Repeat Precision product sales and tracer diagnostics service revenue, including a $1.8 million contribution from ResMetrics, which NCS acquired in July 2025. International results were helped by Middle East well construction product sales, with Morrison noting a 63% year-over-year increase in international product revenue.

Margins, earnings, and cash flow

NCS posted adjusted gross profit of $18.2 million, equating to a 40% adjusted gross margin, down from 44% a year ago but “at the midpoint of our guidance,” Morrison said. He attributed the year-over-year margin decline to lower Canada activity and “reduced higher margin international tracer diagnostic activity in the Middle East,” partially offset by the contribution from ResMetrics.

SG&A expense was $15.7 million, down 3% year-over-year. Morrison said the decline reflected lower incentive bonus accruals and lower share-based compensation tied to cash-settled awards. ResMetrics added $0.7 million of SG&A in the quarter, and Morrison said that after normalizing for those items, “the rest of our SG&A was lower by $0.4 million year-over-year.”

Other income rose to $1.9 million from $0.9 million in the prior-year quarter, driven “primarily by royalty income from licenses associated with our intellectual property, as well as stronger scrap sales,” Morrison said.

Net results shifted to a loss. NCS reported a net loss of $0.4 million, or a loss per share of $0.14, compared with net income of $4.1 million, or diluted EPS of $1.51, in the year-ago period. Adjusted EBITDA was $5.6 million, representing an adjusted EBITDA margin of “over 12%,” but Morrison said it came in below the low end of quarterly guidance and was down from $8.2 million a year earlier.

On cash flow, Morrison said operating cash flow was positive $1.3 million and free cash flow was $0.7 million, improving from a $1.6 million use of cash from operations and negative $2.1 million free cash flow in the first quarter of 2025. As of March 31, 2026, NCS had $34.5 million in cash and $7.2 million in total debt (entirely finance lease obligations), resulting in net cash of more than $27 million. He also cited $18.5 million of borrowing base availability under its undrawn ABL facility, putting total liquidity at $53 million.

Outlook: Q2 guidance, and a modestly higher revenue midpoint for 2026

For the second quarter of 2026, management guided total revenue to $36 million to $39 million, with U.S. revenue of $18 million to $19 million, international revenue of $5 million to $6 million, and Canadian revenue of $13 million to $14 million. Adjusted gross margin is expected to be 35.5% to 37.5%, and adjusted EBITDA is expected to range from breakeven to $2 million. Depreciation and amortization is expected to be approximately $1.6 million in Q2.

Hummer said the company modestly increased the midpoint of its full-year revenue guidance while maintaining adjusted EBITDA expectations. NCS now expects full-year 2026 revenue of $186 million to $194 million, reflecting a $2 million increase to the low end and a $1 million increase to the midpoint of prior guidance. The company maintained its full-year adjusted EBITDA guidance range of $26 million to $29 million, with Hummer saying the benefit of higher revenue is offset by “an expected increase in our cash-settled share-based compensation expense” and additional supply chain costs such as shipping and transportation related to the conflict in the Middle East.

NCS raised planned 2026 capital expenditures to $2.2 million to $2.8 million, an increase of $0.8 million at the midpoint, which Hummer said is “dedicated to expanding manufacturing capacity at Repeat Precision in support of growing sales volumes.” The company guided to free cash flow after distributions to its joint venture partner of $11 million to $15 million, $1 million lower at the midpoint due to higher capital spending, potential working capital timing, and a higher mix of earnings from Repeat Precision.

Hummer reiterated that results and cash generation are expected to skew later in the year, saying adjusted EBITDA should be “weighted to the second half of the year” and free cash flow “weighted towards the end of the year.”

Customer activity, products, and operational updates

In Canada, Hummer said the company still expects full-year customer capital spending to be unchanged, with the first-quarter year-over-year rig count reduction of about 7% expected to reverse after spring breakup. During Q&A, he said the Q1 Canadian miss was driven by three main factors that “cropped up primarily…in March”: weather and early breakup (which he estimated as “probably…half of the driver”), customer deferrals, and drilling issues that delayed sleeve installations.

In the U.S., Hummer cited two developments that improved the outlook:

• A “large customer” ordered a “multi-well, multi-basin fracturing systems project” in the Permian and Rockies following an initial two-well project last year. Hummer said most revenue is expected in the fourth quarter of 2026, with completions expected in 2027. In Q&A, he estimated the project at roughly 2%–3% of annual revenue, or about $4 million–$5 million, with potential additional services that could raise revenue but at lower contribution margins.
• Repeat Precision converted field trials into recurring work with several customers, with increased activity beginning in late February. Hummer said awards were based on operational performance validated in many cases by third-party diagnostics in head-to-head comparisons.

Hummer also discussed Repeat Precision’s StageSaver frac plug introduced last year, saying it helps reduce disruptions from screen outs and other downhole issues and supports advanced completion methods such as Simul-frac and Trimul-frac. He noted ongoing customer trials for StageSaver and Repeat Precision’s PurpleReign dissolvable plug. In response to an analyst question, Hummer said StageSaver is primarily a volume story with “not much of a…pricing differential” versus the company’s traditional composite plugs, while PurpleReign carries a higher price point but similar contribution margins.

On the international side, Hummer said the company’s outlook was consistent with its prior call, including the potential for additional North Sea orders and higher frac plug volumes to the Middle East, partially offset by lower tracer diagnostics activity in Saudi Arabia. He added that NCS expects continued growth in North Sea activity in 2027 as two customers begin multi-year projects, and said the company submitted a tender for a three-well project that could become its first shallow-water project outside the North Sea.

Hummer also provided updates on technology and operations, including a first U.S. “zipper frac” in the MidCon using NCS sleeves, convertible sleeves for enhanced oil recovery in the Permian, development of a 6-inch frac sleeve and service tool for a Rockies project targeted for 2027, and a second fracturing systems job in Oman scheduled for later this year.

In tracer diagnostics, he highlighted deployment of ResMetrics’ SmartProp solution in Canada and completion of the company’s first RapidTrace project in the North Sea, which he said provided near real-time qualitative results and helped a customer make decisions during well testing and “release expensive dayrate assets…earlier.”

On integration, Hummer said “final ResMetrics integration steps are underway,” including relocation of manufacturing and laboratory assets from Houston to Tulsa and consolidation of inventory into NCS districts. He said the company is beginning to see operational synergies that are expected to accelerate in the second half of the year.

Deepwater opportunity and market commentary

Hummer said 2026 guidance does not include potential delivery of sliding sleeves for the company’s “first deepwater opportunity in the Gulf of Mexico,” which could occur in late 2026 or early 2027. In Q&A, he said drilling is expected to start late this year and NCS is targeting sleeve delivery in December, but the company is being cautious due to schedule slippage risk and ongoing work on metallurgy and testing requirements. He added the customer has identified two additional projects where the technology may apply in 2027–2028.

Asked about broader industry activity, Hummer said conversations with operators are “starting to pick up,” referencing customer inquiries discussed by drilling contractors and commentary from larger oilfield service companies about bringing rigs and completion crews back into the market, while emphasizing that NCS would wait for customers to turn inquiries into firm commitments.

Hummer said NCS’s model is positioned to scale if activity accelerates, noting limited manufacturing constraints due to an outsourced model and stating that the primary constraint would be people and hiring. He also said the company is forming an internal cross-functional offshore-focused team and has made a recent hire with global stimulation experience to support offshore growth opportunities.

About NCS Multistage NASDAQ: NCSM

NCS Multistage Holdings, Inc is an oilfield services company that designs, engineers and manufactures downhole completion systems for use in hydraulic fracturing operations across North America. Specializing in multi‐stage stimulation technologies, the company's product portfolio includes composite frac plugs, open‐hole frac systems and mechanical isolation tools that enable producers to optimize well performance in unconventional reservoirs. Its tools are employed in plug-and-perf operations, horizontal completions and re-entry applications, providing zonal isolation and pressure integrity throughout the fracturing process.

In addition to its core frac plug offerings, NCS Multistage provides a range of complementary services including on-site rig support, tool installation supervision and pressure testing.

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