UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
the Securities Exchange Act of 1934
For the quarterly period ended
OR
the Securities Exchange Act of 1934
For the transition period from ______ to ______
Commission file number:
NCS Multistage Holdings, Inc.
(Exact name of registrant as specified in its charter)
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| (State or other jurisdiction of incorporation or organization) | (IRS Employer Identification number) | |||
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| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | ||
| | ☑ | Smaller reporting company | | ||
| Emerging growth company | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes
As of July 30, 2025, there were
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| Item 1. |
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| Condensed Consolidated Statements of Comprehensive Income (Loss) |
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| Notes to Unaudited Condensed Consolidated Financial Statements |
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| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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| Item 3. |
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| Item 4. |
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| Item 1. |
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| Item 1A. |
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| Item 5. | Other Information | 34 |
| Item 6. |
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CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
| June 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable—trade, net | ||||||||
| Inventories, net | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Other current receivables | ||||||||
| Total current assets | ||||||||
| Noncurrent assets | ||||||||
| Property and equipment, net | ||||||||
| Goodwill | ||||||||
| Identifiable intangibles, net | ||||||||
| Operating lease assets | ||||||||
| Deposits and other assets | ||||||||
| Deferred income taxes, net | ||||||||
| Total noncurrent assets | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable—trade | $ | $ | ||||||
| Accrued expenses | ||||||||
| Income taxes payable | ||||||||
| Operating lease liabilities | ||||||||
| Current maturities of long-term debt | ||||||||
| Other current liabilities | ||||||||
| Total current liabilities | ||||||||
| Noncurrent liabilities | ||||||||
| Long-term debt, less current maturities | ||||||||
| Operating lease liabilities, long-term | ||||||||
| Other long-term liabilities | ||||||||
| Deferred income taxes, net | ||||||||
| Total noncurrent liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 10) | ||||||||
| Stockholders’ equity | ||||||||
| Preferred stock, $ par value, shares authorized, shares issued and outstanding at June 30, 2025 and December 31, 2024 | ||||||||
| Common stock, $ par value, shares authorized, shares issued and shares outstanding at June 30, 2025 and shares issued and shares outstanding at December 31, 2024 | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Retained deficit | ( | ) | ( | ) | ||||
| Treasury stock, at cost, shares at June 30, 2025 and shares at December 31, 2024 | ( | ) | ( | ) | ||||
| Total stockholders' equity | ||||||||
| Non-controlling interest | ||||||||
| Total equity | ||||||||
| Total liabilities and stockholders' equity | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Revenues | ||||||||||||||||
| Product sales | $ | $ | $ | $ | ||||||||||||
| Services | ||||||||||||||||
| Total revenues | ||||||||||||||||
| Cost of sales | ||||||||||||||||
| Cost of product sales, exclusive of depreciation and amortization expense shown below | ||||||||||||||||
| Cost of services, exclusive of depreciation and amortization expense shown below | ||||||||||||||||
| Total cost of sales, exclusive of depreciation and amortization expense shown below | ||||||||||||||||
| Selling, general and administrative expenses | ||||||||||||||||
| Depreciation | ||||||||||||||||
| Amortization | ||||||||||||||||
| (Loss) income from operations | ( | ) | ( | ) | ( | ) | ||||||||||
| Other income (expense) | ||||||||||||||||
| Interest expense, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income, net | ||||||||||||||||
| Foreign currency exchange gain (loss), net | ( | ) | ( | ) | ||||||||||||
| Total other income | ||||||||||||||||
| Income (loss) before income tax | ( | ) | ||||||||||||||
| Income tax (benefit) expense | ( | ) | ( | ) | ||||||||||||
| Net income (loss) | ( | ) | ( | ) | ||||||||||||
| Net income attributable to non-controlling interest | ||||||||||||||||
| Net income (loss) attributable to NCS Multistage Holdings, Inc. | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
| Earnings (loss) per common share | ||||||||||||||||
| Basic earnings (loss) per common share attributable to NCS Multistage Holdings, Inc. | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
| Diluted earnings (loss) per common share attributable to NCS Multistage Holdings, Inc. | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
| Weighted average common shares outstanding | ||||||||||||||||
| Basic | ||||||||||||||||
| Diluted | ||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)
(Unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Net income (loss) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
| Foreign currency translation adjustments, net of tax of $ | ( | ) | ( | ) | ||||||||||||
| Comprehensive income (loss) | ( | ) | ( | ) | ||||||||||||
| Less: Comprehensive income attributable to non-controlling interest | ||||||||||||||||
| Comprehensive income (loss) attributable to NCS Multistage Holdings, Inc. | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands, except share data)
(Unaudited)
| Three and Six Months Ended June 30, 2025 | ||||||||||||||||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Additional | Accumulated | Retained | Treasury Stock | Non-controlling | Total | |||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Loss | Deficit | Shares | Amount | Interest | Equity | ||||||||||||||||||||||||||||||||||
| Balances as of December 31, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | ( | ) | $ | ( | ) | $ | $ | ||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Vesting of restricted stock | ||||||||||||||||||||||||||||||||||||||||||||
| Shares withheld | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Currency translation adjustment | — | — | ( | ) | — | ( | ) | |||||||||||||||||||||||||||||||||||||
| Balances as of March 31, 2025 | $ | $ | $ | $ | ( | ) | $ | ( | ) | ( | ) | $ | ( | ) | $ | $ | ||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Distribution to noncontrolling interest | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||
| Currency translation adjustment | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Balances as of June 30, 2025 | $ | $ | $ | $ | ( | ) | $ | ( | ) | ( | ) | $ | ( | ) | $ | $ | ||||||||||||||||||||||||||||
| Three and Six Months Ended June 30, 2024 | ||||||||||||||||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Additional | Accumulated | Retained | Treasury Stock | Non-controlling | Total | |||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Loss | Deficit | Shares | Amount | Interest | Equity | ||||||||||||||||||||||||||||||||||
| Balances as of December 31, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | ( | ) | $ | ( | ) | $ | $ | ||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Distribution to noncontrolling interest | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||
| Vesting of restricted stock | ||||||||||||||||||||||||||||||||||||||||||||
| Shares withheld | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Currency translation adjustment | — | — | ( | ) | — | ( | ) | |||||||||||||||||||||||||||||||||||||
| Balances as of March 31, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | ( | ) | $ | ( | ) | $ | $ | ||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Net (loss) income | — | — | ( | ) | — | ( | ) | |||||||||||||||||||||||||||||||||||||
| Release of restricted stock | ( | ) | ||||||||||||||||||||||||||||||||||||||||||
| Currency translation adjustment | — | — | ( | ) | — | ( | ) | |||||||||||||||||||||||||||||||||||||
| Balances as of June 30, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | ( | ) | $ | ( | ) | $ | $ | ||||||||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| Six Months Ended | ||||||||
| June 30, | ||||||||
| 2025 | 2024 | |||||||
| Cash flows from operating activities | ||||||||
| Net income (loss) | $ | $ | ( | ) | ||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Amortization of deferred loan costs | ||||||||
| Share-based compensation | ||||||||
| Provision for inventory obsolescence | ||||||||
| Deferred income tax (benefit) expense | ( | ) | ||||||
| Gain on sale of property and equipment | ( | ) | ( | ) | ||||
| Provision for (recovery of) credit losses | ( | ) | ||||||
| Net foreign currency unrealized (gain) loss | ( | ) | ||||||
| Proceeds from note receivable | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable—trade | ( | ) | ( | ) | ||||
| Inventories, net | ( | ) | ( | ) | ||||
| Prepaid expenses and other assets | ( | ) | ||||||
| Accounts payable—trade | ||||||||
| Accrued expenses | ( | ) | ||||||
| Other liabilities | ( | ) | ( | ) | ||||
| Income taxes receivable/payable | ( | ) | ||||||
| Net cash provided by operating activities | ||||||||
| Cash flows from investing activities | ||||||||
| Purchases of property and equipment | ( | ) | ( | ) | ||||
| Purchase and development of software and technology | ( | ) | ||||||
| Proceeds from sales of property and equipment | ||||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities | ||||||||
| Payments on finance leases | ( | ) | ( | ) | ||||
| Line of credit borrowings | ||||||||
| Payments of line of credit borrowings | ( | ) | ( | ) | ||||
| Treasury shares withheld | ( | ) | ( | ) | ||||
| Distribution to noncontrolling interest | ( | ) | ( | ) | ||||
| Net cash used in financing activities | ( | ) | ( | ) | ||||
| Effect of exchange rate changes on cash and cash equivalents | ( | ) | ||||||
| Net change in cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents beginning of period | ||||||||
| Cash and cash equivalents end of period | $ | $ | ||||||
| Noncash investing and financing activities | ||||||||
| Assets obtained in exchange for new finance lease liabilities | $ | $ | ||||||
| Assets obtained in exchange for new operating lease liabilities | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
Nature of Business
NCS Multistage Holdings, Inc., a Delaware corporation, through its wholly owned subsidiaries and subsidiaries for which it has a controlling voting interest (collectively referred to as the “Company,” “NCS,” “we,” “our” and “us”), is primarily engaged in providing engineered products and support services for oil and natural gas well construction, well completions and field development strategies. We offer our products and services primarily to exploration and production (“E&P”) companies for use both in onshore and offshore wells. We operate through service facilities principally located in Houston and Odessa, Texas; Tulsa and Oklahoma City, Oklahoma; Calgary, Red Deer, Grande Prairie and Estevan, Canada; Neuquén, Argentina and Stavanger, Norway.
Basis of Presentation
Our accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X of the Securities Exchange Act of 1934, as amended, issued by the Securities Exchange Commission (“SEC”) and have not been audited by our independent registered public accounting firm. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with our financial statements and related notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2024 (“Annual Report”). We consolidate Repeat Precision, LLC and its subsidiary (“Repeat Precision”), an entity in which we own a
Significant Accounting Policies
Our significant accounting policies are described in “Note 2. Summary of Significant Accounting Policies” in our Annual Report.
Recent Accounting Pronouncements
In November 2024, the FASB issued ASU No. 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This ASU requires additional disclosure of certain costs and expenses within the notes to the financial statements. The new standard is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. We are currently evaluating the impact of the adoption of this guidance.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU improves income tax disclosures including a requirement to present specific categories in the effective tax rate reconciliation, additional information for reconciling items that meet a quantitative threshold, certain disclosures pertaining to income taxes paid (net of refunds received) and amendments to other disclosure requirements. The new standard is effective for annual periods beginning after December 15, 2024 and should be applied prospectively although retrospective application is permitted. Early adoption is permitted. We expect to adopt this guidance as of December 31, 2025, with no significant impact on our financial position, results of operations or cashflows.
Note 2. Segment and Geographic Information
We sell complementary products and services largely to E&P customers in the oil and gas industry, through reportable segment. See “Note 3. Segment and Geographic Information” to our consolidated financial statements of our Annual Report for a more detailed description. We manage our activities on a consolidated basis applying qualitative factors including the nature of the products and services, the nature and commonality of production processes, a shared customer base primarily in North America, the scope of geographic operations and a common industry and regulatory environment. Our chief operating decision maker (“CODM”) is the Chief Executive Officer.
We evaluate our performance on a consolidated basis by reviewing key income statement items such as revenue, gross margin, and net income, as well as other specific balance sheet and cash flow items; comparing certain key financial figures to financial guidance; and evaluating our share price performance and estimated trading multiple relative to selected peers.
Our CODM utilizes the GAAP measures of net income and cash flow from operations as primary measures of profitability and cash flow, respectively, as well as secondary non-GAAP measures of Adjusted EBITDA and free cash flow. The CODM assesses segment performance using these measures, and he decides how to allocate resources, which may include evaluating the budget, current forecast and our consolidated cash position, with periodic review of our market share and our common stock performance relative to peers. The CODM assesses business performance consistent with the presentation on our consolidated financial statements, supplemented with a review of certain significant selling, general and administrative (“SG&A”) expense categories.
The following table summarizes significant SG&A expenses that are reviewed by the CODM but are not separately presented on our consolidated statements of operations (in thousands):
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Payroll and employee benefits | $ | $ | $ | $ | ||||||||||||
| Share-based compensation | ||||||||||||||||
| Professional services | ||||||||||||||||
| Insurance | ||||||||||||||||
| Software and hardware | ||||||||||||||||
| Other | ||||||||||||||||
| Total SG&A | $ | $ | $ | $ | ||||||||||||
The following table summarizes revenue by geographic area attributed based on the current billing address of the customer (in thousands):
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| United States | ||||||||||||||||
| Product sales | $ | $ | $ | $ | ||||||||||||
| Services | ||||||||||||||||
| Total United States | ||||||||||||||||
| Canada | ||||||||||||||||
| Product sales | ||||||||||||||||
| Services | ||||||||||||||||
| Total Canada | ||||||||||||||||
| Other Countries | ||||||||||||||||
| Product sales | ||||||||||||||||
| Services | ||||||||||||||||
| Total other countries | ||||||||||||||||
| Total | ||||||||||||||||
| Product sales | ||||||||||||||||
| Services | ||||||||||||||||
| Total revenues | $ | $ | $ | $ | ||||||||||||
The following table summarizes long-lived assets (defined as property and equipment, net and operating lease assets, net) by geographic area (in thousands):
| June 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| United States | $ | $ | ||||||
| Canada | ||||||||
| Other Countries | ||||||||
| Total | $ | $ | ||||||
Note 3. Revenues
Disaggregation of Revenue
We sell our products and services primarily in North America and in selected international markets. See above "Note 2. Segment and Geographic Information" for our disaggregated revenue by geographic area.
Contract Balances
If the timing of the delivery of products and provision of services is different from the timing of the customer payments, we recognize either a contract asset (performance precedes contractual due date in connection with estimates of variable consideration) or a contract liability (customer payment precedes performance) on our condensed consolidated balance sheet.
The following table presents the current contract liabilities as of June 30, 2025 and December 31, 2024 (in thousands):
| Balance at December 31, 2024 | $ | |||
| Additions | ||||
| Revenue recognized | ( | ) | ||
| Balance at June 30, 2025 | $ |
We currently do have any contract assets or non-current contract liabilities. Our contract liability as of June 30, 2025 and December 31, 2024 is included in other current liabilities on the applicable condensed consolidated balance sheets. Our performance obligations for our product and services revenues are typically satisfied before the customer’s payment; however, prepayments may occasionally be required. There was $
Practical Expedient
We do not disclose the value of unsatisfied performance obligations when the related contract has a duration of one year or less. We recognize revenue equal to what we have the right to invoice when that amount corresponds directly with the value to the customer of our performance to date.
Note 4. Inventories, net
Inventories consist of the following as of June 30, 2025 and December 31, 2024 (in thousands):
| June 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Raw materials | $ | $ | ||||||
| Work in process | ||||||||
| Finished goods | ||||||||
| Total inventories, net | $ | $ | ||||||
Note 5. Other Current Receivables
Other current receivables consist of the following as of June 30, 2025 and December 31, 2024 (in thousands):
| June 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Current income tax receivables | $ | $ | ||||||
| Employee receivables | ||||||||
| Other receivables | ||||||||
| Total other current receivables | $ | $ | ||||||
Other receivables as of June 30, 2025 and December 31, 2024, included the following: (i) a receivable of $
Note 6. Property and Equipment
Property and equipment by major asset class consist of the following as of June 30, 2025 and December 31, 2024 (in thousands):
| June 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Land | $ | $ | ||||||
| Building and improvements | ||||||||
| Machinery and equipment | ||||||||
| Computers and software | ||||||||
| Furniture and fixtures | ||||||||
| Vehicles | ||||||||
| Right of use assets - finance leases | ||||||||
| Less: Accumulated depreciation and amortization | ( | ) | ( | ) | ||||
| Construction in progress | ||||||||
| Property and equipment, net | $ | $ | ||||||
The following table presents the depreciation expense associated with the respective income statement line items for the three and six months ended June 30, 2025 and 2024 (in thousands):
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Cost of sales | ||||||||||||||||
| Cost of product sales | $ | $ | $ | $ | ||||||||||||
| Cost of services | ||||||||||||||||
| Selling, general and administrative expenses | ||||||||||||||||
| Total depreciation | $ | $ | $ | $ | ||||||||||||
We evaluate our property and equipment for impairment whenever changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. We determined there were no triggering events that indicated potential impairment of our property and equipment for the three and six months ended June 30, 2025 and 2024, and accordingly
Note 7. Goodwill and Identifiable Intangibles
The carrying amount of goodwill is summarized as follows (in thousands):
| June 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Gross value | $ | $ | ||||||
| Accumulated impairment | ( | ) | ( | ) | ||||
| Net | $ | $ | ||||||
We perform an annual impairment analysis of goodwill as of December 31, or whenever there is a triggering event that indicates an impairment loss may have been incurred. As of June 30, 2025 and 2024, we did not identify any triggering events that would indicate potential impairment for Repeat Precision, our only reportable unit with goodwill. Therefore,
Identifiable intangibles by major asset class consist of the following (in thousands):
| June 30, 2025 | |||||||||||||
| Estimated | Gross | ||||||||||||
| Useful | Carrying | Accumulated | Net | ||||||||||
| Lives (Years) | Amount | Amortization | Balance | ||||||||||
| Technology | | $ | $ | ( | ) | $ | |||||||
| Customer relationships | | ( | ) | ||||||||||
| Total identifiable intangibles | $ | $ | ( | ) | $ | ||||||||
| December 31, 2024 | |||||||||||||
| Estimated | Gross | ||||||||||||
| Useful | Carrying | Accumulated | Net | ||||||||||
| Lives (Years) | Amount | Amortization | Balance | ||||||||||
| Technology | | $ | $ | ( | ) | $ | |||||||
| Customer relationships | | ( | ) | ||||||||||
| Total identifiable intangibles | $ | $ | ( | ) | $ | ||||||||
Total amortization expense, which is associated with SG&A expenses on the condensed consolidated statements of operations, was $
Identifiable intangibles are tested for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. As of June 30, 2025 and 2024, we evaluated potential triggering events and determined that there were no triggering events which indicated potential impairment of our intangibles, which are substantially related to our Repeat Precision asset group. Therefore, we did record any impairment charges related to our identifiable intangibles for the three and six months ended June 30, 2025 and 2024.
Note 8. Accrued Expenses
Accrued expenses consist of the following as of June 30, 2025 and December 31, 2024 (in thousands):
| June 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Accrued payroll and bonus | $ | $ | ||||||
| Property and franchise taxes accrual | ||||||||
| Accrued other miscellaneous liabilities | ||||||||
| Total accrued expenses | $ | $ | ||||||
Accrued payroll and bonus includes an incentive bonus which is accrued based on operating performance and is generally paid during the first quarter of the following year.
Note 9. Debt
Our long-term debt consists of the following as of June 30, 2025 and December 31, 2024 (in thousands):
| June 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| ABL Facility | $ | $ | ||||||
| Repeat Precision Promissory Note | ||||||||
| Finance leases | ||||||||
| Total debt | ||||||||
| Less: current portion | ( | ) | ( | ) | ||||
| Long-term debt | $ | $ | ||||||
The estimated fair value of total debt as of June 30, 2025 and December 31, 2024 was $
Below is a description of our financing arrangements.
ABL Facility
In May 2022, we entered into a secured asset-based revolving credit facility (the “ABL Facility”), where credit availability is subject to a borrowing base calculation. The ABL Facility is governed by the Credit Agreement dated as of May 3, 2022, by and between NCS Multistage Holdings, Inc. (“NCSH”), Pioneer Investment, Inc., NCS Multistage, LLC, NCS Multistage Inc., the other loan parties thereto, the lenders party thereto, and JPMorgan Chase Bank, N.A., as administrative agent and as a lender under the facility provided therein (the “Credit Agreement”). In April 2024, we amended the Credit Agreement to modify the benchmark that may be used for loans in Canadian dollars in connection with the cessation of the CDOR Rate and transition to the CORRA Rate.
The ABL Facility is a revolving credit facility with an aggregate principal amount of $
Borrowings under the ABL Facility may be made in U.S. dollars with interest calculated using either the “ABR”, the “Adjusted Daily Simple SOFR” or the “Adjusted Term SOFR Rate”, and in Canadian dollars with interest calculated using the “Canadian Prime Rate” or the “Adjusted Term CORRA Rate” (each as defined in the amended and restated Credit Agreement). Borrowings bear interest plus a margin that varies depending on our leverage ratio as follows: (i) for ABR based loans, between
The obligations of the borrowers under the ABL Facility are guaranteed by NCSH and each of our U.S. and Canadian subsidiaries (other than Repeat Precision), as well as each of our future direct and indirect subsidiaries organized under the laws of the United States or Canada (subject to certain exceptions), and are secured by substantially all of the assets of NCSH and its subsidiaries, in each case, subject to certain exceptions and permitted liens.
The Credit Agreement requires, as a condition to borrowing, that available cash on hand after borrowings does not exceed $
The Credit Agreement includes customary events of default for facilities of this type (with customary materiality thresholds and grace periods, as applicable). If an event of default occurs, the lenders party to the Credit Agreement may elect (after the expiration of any applicable notice or grace periods) to declare all outstanding borrowings under such facility, together with accrued and unpaid interest and other amounts payable thereunder, to be immediately due and payable. The lenders party to the Credit Agreement also have the right upon an event of default thereunder to terminate any commitments to provide further borrowings, or to provide additional financing in excess of the borrowing base limit, or to proceed against the collateral securing the ABL Facility.
We capitalized direct costs of $
Repeat Precision Promissory Note
In February 2018, Repeat Precision entered into a promissory note with Security State Bank & Trust, Fredericksburg (the “Repeat Precision Promissory Note”). The Repeat Precision Promissory Note had been renewed annually several times. In May 2025, the Repeat Precision Promissory Note was again renewed with an aggregate borrowing capacity of $
Finance Leases
We lease assets under finance lease arrangements, including an office and laboratory in Tulsa, Oklahoma, facilities in Odessa, Texas, and certain operating equipment and software. We also maintain a vehicle leasing arrangement with a fleet management company through which we lease light vehicles and trucks that meet the finance lease criteria.
Note 10. Commitments and Contingencies
Litigation
In the ordinary course of our business, from time to time, we have various claims, lawsuits and administrative proceedings that are pending or threatened with respect to commercial, intellectual property and employee matters.
Canada Patent Matters
● In July 2018, we filed a patent infringement lawsuit seeking unspecified damages against Kobold Corporation, Kobold Completions Inc. and 2039974 Alberta Ltd. (“Kobold”) in the Federal Court of Canada (“Canada Court”), alleging that Kobold’s fracturing tools and methods infringe on several of our Canadian patents. In July 2019, Kobold filed a counterclaim seeking unspecified damages alleging that our fracturing tools and methods infringe on their patent. The patent infringement litigation against Kobold and their counterclaim was heard in early 2022.
In October 2023, the judge rendered a decision against us holding that our asserted patents are invalid and that we are infringing the Kobold asserted patent. The Canada Court ordered us to pay Kobold approximately $
We believe that applicable law supports strong grounds to appeal the decision by the Canada Court. The appeal was heard in April 2025, and we expect a decision to be granted by late 2025 or early 2026. As we cannot predict with certainty the outcome of the appeal, we believe a loss is reasonably possible, but such a loss is not probable or reasonably estimable as of June 30, 2025. If we do not prevail in the appeal phase, the damages portion would then be decided by the Canada Court and we do not know what damages, if any, will be awarded to Kobold. The damages determination would likely extend for one or more years after the appeals decision. We would expect any damages awarded to be more modest because of the relative ease and minimal cost incurred to implement changes to our product to comply with the injunction, with such changes resulting in no significant commercial impact to date. In July 2024, Kobold filed a motion with the Canada Court regarding whether the injunction allowed us to modify our product or, as Kobold contends, we needed to destroy or deliver the product to Kobold. If the Canada Court agrees with Kobold, a fine or other remedy may be imposed against the Company.
● In April 2020, Kobold filed a separate patent infringement lawsuit seeking unspecified damages against us in the Canada Court, alleging that our fracturing tools infringe on their Canadian patents. In the summary judgment phase, we have successfully dismissed some of the asserted products. However, we were not able to dismiss all of the claims because there remained factual determinations that were not possible in a summary judgment proceeding for our other products. We believe we have strong arguments of invalidity and non-infringement in this matter. We expect the trial for this matter to be heard in the fourth quarter of 2026.
In connection with patent infringement claims regarding U.S. Patent No. 10,465,445 (“the ’445 Patent”), we received favorable jury verdicts against Nine Energy Services, Inc. (“Nine”) and TCO AS (“TCO”) in the Western District of Texas, Waco Division (“Waco District Court”). In January 2022, the jury awarded NCS approximately $
In accordance with GAAP, we accrue for contingencies where the occurrence of a material loss is probable and can be reasonably estimated. Our legal contingencies may increase or decrease, on a matter-by-matter basis, to account for future developments. Although the outcome of any legal proceeding cannot be predicted with any certainty, our assessment of the likely outcome of litigation matters is based on our judgment of a number of factors, including experience with similar matters, past history, precedents, relevant financial information and other evidence and facts specific to each matter.
Note 11. Share-Based Compensation
During the six months ended June 30, 2025, we granted
During the six months ended June 30, 2025, we granted
In addition, during the six months ended June 30, 2025, we granted
Total share-based compensation expense for all awards was $
Note 12. Income Taxes
The computation of the annual estimated effective tax rate at each interim period requires certain estimates and assumptions including, but not limited to, the expected operating income (or loss) for the year, projections of the proportion of income (or loss) earned and taxed in foreign jurisdictions, permanent and temporary differences and the likelihood of recovering deferred tax assets generated in the current year. The accounting estimates used to compute the provision for income taxes may change as new events occur, more experience is acquired, or additional information is obtained. The computation of the annual estimated effective tax rate includes applicable modifications, which were projected for the year, such as certain book expenses not deductible for tax, tax credits and foreign deemed dividends.
Our effective tax rate (“ETR”) from continuing operations was (
As of June 30, 2025, we reversed a portion of the valuation allowance previously recorded against the deferred tax assets of our Canadian operating subsidiary due to sustained improvements in operating results, including a return to profitability and forecasts of future taxable income that are sufficient to realize the remaining deferred tax assets. The reversal of the valuation allowance resulted in a deferred income tax benefit of $
Note 13. Earnings (Loss) Per Common Share
The following table presents the reconciliation of the numerator and denominator for calculating earnings (loss) per common share (in thousands, except per share data):
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Numerator | ||||||||||||||||
| Net income (loss) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
| Less: income attributable to non-controlling interest | ||||||||||||||||
| Net income (loss) attributable to NCS Multistage Holdings, Inc. | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
| Denominator | ||||||||||||||||
| Basic weighted average number of shares | ||||||||||||||||
| Dilutive effect of other equity awards | ||||||||||||||||
| Diluted weighted average number of shares | ||||||||||||||||
| Earnings (loss) per common share | ||||||||||||||||
| Basic | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
| Diluted | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
| Potentially dilutive securities excluded as anti-dilutive | ||||||||||||||||
Note 14. Subsequent Event
On July 31, 2025, we acquired
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read together with our financial statements and the related notes thereto included in this Quarterly Report on Form 10-Q (“Quarterly Report”) and with our audited financial statements and the related notes thereto included in our Annual Report on Form 10-K (“Annual Report”), filed with the Securities and Exchange Commission (the “SEC”). This discussion and analysis contains forward-looking statements regarding the industry outlook, estimates and assumptions concerning events and financial and industry trends that may affect our future results of operations or financial condition and other non-historical statements. These forward-looking statements are subject to numerous risks and uncertainties, including but not limited to the risks and uncertainties described in “—Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors.” Our actual results may differ materially from those contained in or implied by these forward-looking statements. As used in this Quarterly Report, except where the context otherwise requires or where otherwise indicated, the terms “Company,” “NCS,” “we,” “our” and “us” refer to NCS Multistage Holdings, Inc.
Overview and Outlook
We are 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. We provide our products and services primarily to exploration and production (“E&P”) 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. Our 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. We provide our products and services to various customers, including leading large independent oil and natural gas companies and major oil companies.
Our primary offering is our fracturing systems products and services, which enable efficient pinpoint stimulation: the process of individually stimulating each entry point into a formation targeted by an oil or natural gas well. Our fracturing systems products and services can be used in both cemented and open-hole wellbores and enable our customers to precisely place stimulation treatments in a more controlled and repeatable manner as compared with traditional completion techniques. Our fracturing systems products and services are utilized in conjunction with third-party providers of pressure pumping, coiled tubing and other services. As an extension of fracturing systems, we offer enhanced recovery systems, which enable our customers to inject water, other fluids, or gases in a controlled manner with the objective of increasing the amount of hydrocarbons produced from their assets.
We own a 50% interest in Repeat Precision, LLC (“Repeat Precision”), which sells composite and dissolvable frac plugs, setting tools, perforating guns and related products. We provide tracer diagnostics services for well completion and reservoir characterization that utilize downhole chemical and radioactive tracers. We sell products for well construction, including casing buoyancy systems, liner hanger systems and toe initiation sleeves. We operate in one reportable segment that has been identified based on how our chief operating decision maker manages our business.
On July 31, 2025, we acquired 100% of the equity interests of Reservoir Metrics, LLC, and its related entities (“ResMetrics”), a provider of tracer diagnostics services, for $5.9 million, on a cash-free, debt-free basis, in cash and assumed debt, subject to a working capital adjustment, with an additional earn-out of up to $1.3 million to be paid in early 2026, depending solely on changes in international trade tariff rates for certain chemical imports during 2025. We believe the purchase of ResMetrics will further expand and complement our existing tracer diagnostics offerings.
Our products and services are primarily sold to North American E&P companies and our ability to generate revenues from our products and services depends upon oil and natural gas drilling and completion activity in North America. Oil and natural gas drilling and completion activity is directly influenced by oil and natural gas prices.
Based on year-to-date E&P company drilling and completion activity, projected capital budgets for the remainder of 2025, and recent industry reports, we believe: (i) activity in Canada will remain stable or slightly decrease compared to 2024; (ii) the U.S. market will continue to experience a decline in activity, driven by conservative oil production growth targets and ongoing consolidation within the E&P sector, partially offset by potential increases in activity targeting natural gas; and (iii) activity and spending in international markets may increase in the markets where NCS participates, including the North Sea, the Middle East, and Argentina, despite relatively flat overall international spending. However, these expected trends could change if global trade tensions further escalate and impact commodity prices, and, if sustained, lead to a more dramatic decrease in drilling and completion activity in these markets.
Oil and natural gas prices were volatile in 2024, a trend that continued into 2025. This volatility has been influenced by multiple factors, including geopolitical incidents from trade tensions, the ongoing war between Russia and Ukraine and conflicts in the Middle East. Trade disruptions or any further escalation of these conflicts could intensify commodity price volatility. Oil prices have also been negatively impacted by concerns of an overall global economic slowdown, or a possible recession which could result from, or be exacerbated by, current global trade tensions. In addition, long term global oil demand growth concerns and an increase in supply have also negatively impacted oil prices. In recent years, to mitigate the impact of uncertain economic conditions on the global oil market, certain producing countries extended voluntary oil output cuts while maintaining spare capacity, enabling rapid production adjustments as market conditions warrant. However, in 2025, these countries began to accelerate a planned increase to their production quotas. See further discussion below on oil and natural gas pricing.
Our products and services face significant competitive pressures across all offerings, which has and may continue to have a negative impact on market share and operating margins for certain product lines. This competitive pressure constrains our ability to raise prices necessary to offset rising costs, particularly during periods of higher cost inflation or periods affected by the uncertainty of escalating and de-escalating tariffs, with supply-chain costs impacted by the tariffs then in effect. While inflationary cost pressures moderated somewhat beginning in the latter half of 2023 through 2024, the implementation of new tariffs, including steel and aluminum, and the continued threats of additional tariffs in 2025, could lead to additional costs that we may not be able to recover through price increases.
The U.S. administration has announced targeted tariffs for many countries, many of which are substantial, that were paused for a 90-day period in April 2025. The pause on tariffs was further extended to August 2025. Some countries have reached trade agreements with the United States and others may reach agreements while these announced tariffs remain paused. However, some other tariffs remain in place, including a baseline tariff on imported goods that previously took effect, as well as previously enacted tariffs on steel and aluminum. For Canada and Mexico specifically, goods covered by the United States-Mexico-Canada Agreement (“USMCA”) continue to have no tariff, though ongoing trade tensions have led to discussions of additional tariffs that could potentially impact even USMCA-compliant goods in future negotiations. Currently, we believe that our supply chain in Mexico is compliant with the USMCA, where Repeat Precision manufactures its products and certain components used in our fracturing systems products. We believe that products we ship from the United States to Canada are compliant with the USMCA. The tariffs on steel have impacted our costs and we expect the tariffs on China to impact the price of chemicals we procure for our tracer diagnostics services business, as our inventory is consumed in operations and we replenish our supply. The tariffs ultimately imposed by the U.S. administration, particularly with regards to Mexico, Canada, and China, could impact our cost of goods sold. Most of our sliding sleeves and other products sold in Canada are sourced from the United States. Therefore, retaliatory tariffs implemented by the Canadian government on goods entering from the United States could increase the cost of our products in Canada. U.S. tariffs on Canadian energy exports could negatively impact drilling and completion activity levels by our Canadian customers, potentially reducing demand for our products and services in the Canadian market.
To counter inflationary pressures on the economy, central banks, including the U.S. Federal Reserve, increased reference interest rates several times in the past few years, actions typically expected to increase borrowing costs and restrain economic activity. Beginning in September 2024, the U.S. Federal Reserve implemented several modest decreases to the benchmark interest rate amid favorable inflation and job data. Although further rate cuts were anticipated for 2025, these rate changes may be postponed as the U.S. Federal Reserve evaluates monetary policy considering the tariffs imposed by the U.S. administration and any reciprocal tariffs from other countries.
Market Conditions
Oil and Natural Gas Drilling and Completion Activity
Oil and natural gas prices remain volatile. The average WTI crude oil price declined in the second quarter of 2025 compared to the first quarter. While geopolitical tensions and specific supply disruptions applied some upward pressure on oil prices during the quarter, overall prices fell due to lower demand growth expectations, particularly in key markets, and an increase in oil supply, including by members of OPEC and certain other countries, including Russia (informally known as “OPEC+”) and non-OPEC+ countries. Over the past few years, to address the uncertain outlook for the global economy and, specifically the oil markets, and to reduce the potential for an oversupply of oil and gas inventory, members of OPEC+ agreed to several collective voluntary oil production reductions. However, OPEC+ has started and plans to accelerate a phase out of voluntary oil production reductions in 2025.
Natural gas pricing continues to be volatile and has decreased for the second quarter of 2025 to an average of $3.19 per MMBtu compared to an average of $4.14 per MMBtu for the first quarter of 2025. Realized natural gas prices for U.S. producers in West Texas and for Canadian E&P customers are typically at a discount to U.S. Henry Hub pricing. The natural gas price decrease during the second quarter of 2025 is due to higher than expected surplus levels of natural gas in storage.
Sustained significant declines in commodity prices, or sustained periods when the local pricing received in regional markets is below benchmark pricing, known in the industry as high differentials, which could be the results of tariffs, would be expected to lead North American E&P companies to reduce drilling and completion activity, which could negatively impact our business.
| Average Price |
||||||||||||
| Quarter Ended |
WTI Crude (per Bbl) |
Brent Crude (per Bbl) |
Henry Hub Natural Gas (per MMBtu) |
|||||||||
| 6/30/2024 |
$ | 81.81 | $ | 84.68 | $ | 2.07 | ||||||
| 9/30/2024 |
76.43 | 80.01 | 2.11 | |||||||||
| 12/31/2024 |
70.73 | 74.66 | 2.44 | |||||||||
| 3/31/2025 |
71.78 | 75.87 | 4.14 | |||||||||
| 6/30/2025 |
64.57 | 68.07 | 3.19 | |||||||||
Listed and depicted below are the average number of operating onshore rigs in the United States and in Canada per quarter since the second quarter of 2024, as provided by Baker Hughes Company. The quarterly changes are impacted by seasonality, particularly the effect of the spring break-up during the second quarter on the Canadian land rig count:
| Average Drilling Rig Count |
||||||||||||
| Quarter Ended |
U.S. Land |
Canada Land |
North America Land |
|||||||||
| 6/30/2024 |
583 | 134 | 717 | |||||||||
| 9/30/2024 |
566 | 207 | 773 | |||||||||
| 12/31/2024 |
571 | 194 | 765 | |||||||||
| 3/31/2025 |
574 | 214 | 788 | |||||||||
| 6/30/2025 |
559 | 127 | 686 | |||||||||
A substantial portion of our business is subject to seasonality, which results in quarterly variability. In Canada, we typically experience higher activity levels in the first quarter of each year, as our customers take advantage of the winter freeze to gain access to remote drilling and production areas. In the past, our revenue in Canada has declined during the second quarter due to warming weather conditions that result in thawing, softer ground, difficulty accessing well sites and road bans that curtail drilling and completion activity. Access to well sites typically improves throughout the third and fourth quarters in Canada, leading to activity levels that are higher than in the second quarter, but usually lower than activity in the first quarter. Canadian completions activity can be impacted by wildfires that are usually experienced in the spring and summer seasons. Our business activity can also be affected by customer spending patterns. In some years, customers in both the United States and Canada may exhaust their capital budgets before year-end or reduce their activities during the winter holidays in late December, resulting in lower drilling and completion activity during the fourth quarter. As a result, we typically experience reduced customer activity at the end of the year.
How We Generate Revenues
We derive our revenues from the sale of our fracturing systems and enhanced recovery systems products and the provision of related services, casing buoyancy systems, liner hanger systems and toe initiation sleeves products and from sales of our tracer diagnostics services in addition to the sale of composite and dissolvable frac plugs, setting tools, perforating guns and related products through Repeat Precision.
Product sales represented 76% and 64% of our revenues for the three months ended June 30, 2025 and 2024, respectively, and 73% and 69% for the six months ended June 30, 2025 and 2024, respectively. Most of our sales are on a just-in-time basis, as specified in individual purchase orders, with a fixed price for our products. We occasionally supply our customers with large orders that may be fulfilled on negotiated terms. Services represented 24% and 36% of our revenues for the three months ended June 30, 2025 and 2024, respectively, and 27% and 31% for the six months ended June 30, 2025 and 2024, respectively. Services include tool charges and associated personnel services related to fracturing systems and tracer diagnostics services. Our services are provided at agreed-upon rates to customers for the provision of our downhole frac isolation assembly, which may include our personnel, and for the provision of tracer diagnostics services.
During periods of low drilling and well completion activity, or as may be needed to compete in certain markets, we may, in some instances, lower the prices of our products and services. Our revenues are also impacted by well complexity since wells with more stages typically result in longer jobs, which may increase revenue attributable to the use of more sliding sleeves or increase composite frac plug sales and increase the volume of services we provide.
The percentages of our revenues derived from sales in Canada and denominated in Canadian dollars were approximately 49% and 41% for the three months ended June 30, 2025 and 2024, respectively, and approximately 64% and 59% for the six months then ended. Our Canadian contracts are typically invoiced in Canadian dollars; therefore, the effects of foreign currency fluctuations impact our revenues and are regularly monitored. Strengthening of the U.S. dollar, our reporting currency, relative to the Canadian dollar would result in lower reported revenues, partially offset by lower reported cost of sales and selling, general and administrative (“SG&A”) expenses.
Although most of our sales are to North American E&P companies, we also have sales to customers outside of North America, and we expect sales to international customers to increase over time. These international sales are made through local NCS entities or to our local operating partners typically on a free on board or free carrier basis with a point of sale in the United States. Some of the locations in which we have operating partners or sales representatives include the Middle East and China. Our operating partners and representatives do not have authority to contractually bind NCS but market our products in their respective territories as part of their product or services offering.
Costs of Conducting our Business
Our cost of sales is comprised of expenses relating to the manufacture of our products in addition to the costs of our support services. Manufacturing cost of sales includes payments made to our suppliers for raw materials, such as steel, and payments made to machine shops for the manufacture of product components and finished assemblies and costs related to our employees that perform quality control analysis, assemble and test our products. We obtain certain chemicals utilized in our tracer diagnostics services business from suppliers in China, which are subject to tariffs that increase our costs. In addition, Repeat Precision operates a manufacturing facility with supporting personnel in Mexico, which has allowed us to reduce our costs for certain product categories. We review forecasted activity levels in our business and either directly procure or support our vendors in procuring the required raw materials with sufficient lead time to meet our business requirements. Prices for certain raw materials, including steel and chemicals and for purchased components and outsourced services, have increased in recent years due to inflation, exacerbated by the impacts resulting from Russia’s continuing invasion of Ukraine. Although steel pricing has declined from recent highs, tariffs have increased prices and threaten to further impact our supply chain as described above. Cost of sales for support services includes compensation and benefit-related expenses for employees who provide direct revenue generating services to customers in addition to the costs incurred by these employees for travel and subsistence while on site. Cost of sales includes other variable manufacturing costs, such as shrinkage, obsolescence, revaluation and scrap related to our existing inventory and costs related to the chemicals used and laboratory analysis associated with our tracer diagnostics services.
Our SG&A expenses are comprised of compensation expense, which includes compensation and benefit-related expenses for our employees who are not directly involved in revenue generating activities, including those involved in our research and development activities, as well as our general operating costs. These general operating costs include, but are not limited to: rent and occupancy for our facilities, information technology infrastructure services, software licensing, advertising and marketing, third party research and development, risk insurance and professional service fees for audit, legal and other consulting services. Our SG&A expenses also include litigation expenses and expected credit losses.
The percentage of our operating costs denominated in Canadian dollars (including cost of sales and SG&A expenses but excluding depreciation and amortization expense) approximated 25% and 24% for the three months ended June 30, 2025 and 2024, respectively, and 30% and 26% for the six months then ended.
Results of Operations
Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024
The following tables summarize our results of operations, gross margins and revenues by geographic area for the periods presented (dollars in thousands):
| Three Months Ended |
||||||||||||||||
| June 30, |
Variance |
|||||||||||||||
| 2025 |
2024 |
$ |
% |
|||||||||||||
| Revenues |
||||||||||||||||
| Product sales |
$ | 27,776 | $ | 19,022 | $ | 8,754 | 46.0 | % | ||||||||
| Services |
8,678 | 10,668 | (1,990 | ) | (18.7 | )% | ||||||||||
| Total revenues |
36,454 | 29,690 | 6,764 | 22.8 | % | |||||||||||
| Cost of sales |
||||||||||||||||
| Cost of product sales, exclusive of depreciation and amortization expense shown below |
18,214 | 12,209 | 6,005 | 49.2 | % | |||||||||||
| Cost of services, exclusive of depreciation and amortization expense shown below |
5,242 | 5,510 | (268 | ) | (4.9 | )% | ||||||||||
| Total cost of sales, exclusive of depreciation and amortization expense shown below |
23,456 | 17,719 | 5,737 | 32.4 | % | |||||||||||
| Selling, general and administrative expenses |
13,626 | 14,820 | (1,194 | ) | (8.1 | )% | ||||||||||
| Depreciation |
1,235 | 1,134 | 101 | 8.9 | % | |||||||||||
| Amortization |
167 | 167 | — | — | % | |||||||||||
| Loss from operations |
(2,030 | ) | (4,150 | ) | 2,120 | 51.1 | % | |||||||||
| Other income (expense) |
||||||||||||||||
| Interest expense, net |
(68 | ) | (115 | ) | 47 | 40.9 | % | |||||||||
| Other income, net |
1,563 | 2,203 | (640 | ) | (29.1 | )% | ||||||||||
| Foreign currency exchange gain (loss), net |
1,201 | (507 | ) | 1,708 | 336.9 | % | ||||||||||
| Total other income |
2,696 | 1,581 | 1,115 | 70.5 | % | |||||||||||
| Income (loss) before income tax |
666 | (2,569 | ) | 3,235 | 125.9 | % | ||||||||||
| Income tax (benefit) expense |
(1,032 | ) | 270 | (1,302 | ) | (482.2 | )% | |||||||||
| Net income (loss) |
1,698 | (2,839 | ) | 4,537 | 159.8 | % | ||||||||||
| Net income attributable to non-controlling interest |
774 | 256 | 518 | 202.3 | % | |||||||||||
| Net income (loss) attributable to NCS Multistage Holdings, Inc. |
$ | 924 | $ | (3,095 | ) | $ | 4,019 | 129.9 | % | |||||||
| Three Months Ended |
||||||||||||||||
| June 30, |
Variance |
|||||||||||||||
| 2025 |
2024 |
$ |
% |
|||||||||||||
| Gross Margin and Gross Margin Percentage: |
||||||||||||||||
| Cost of product sales, exclusive of depreciation and amortization expense |
$ | 18,214 | $ | 12,209 | $ | 6,005 | 49.2 | % | ||||||||
| Depreciation and amortization attributable to cost of product sales |
505 | 459 | 46 | 10.0 | % | |||||||||||
| Cost of product sales |
18,719 | 12,668 | 6,051 | 47.8 | % | |||||||||||
| Product sales gross profit |
$ | 9,057 | $ | 6,354 | $ | 2,703 | 42.5 | % | ||||||||
| Product sales gross margin |
32.6 | % | 33.4 | % | ||||||||||||
| Cost of services, exclusive of depreciation and amortization expense |
$ | 5,242 | $ | 5,510 | $ | (268 | ) | (4.9 | )% | |||||||
| Depreciation and amortization attributable to cost of services |
224 | 194 | 30 | 15.5 | % | |||||||||||
| Cost of services |
5,466 | 5,704 | (238 | ) | (4.2 | )% | ||||||||||
| Services gross profit |
$ | 3,212 | $ | 4,964 | $ | (1,752 | ) | (35.3 | )% | |||||||
| Services gross margin |
37.0 | % | 46.5 | % | ||||||||||||
| Total cost of sales |
$ | 24,185 | $ | 18,372 | $ | 5,813 | 31.6 | % | ||||||||
| Total gross profit |
$ | 12,269 | $ | 11,318 | $ | 951 | 8.4 | % | ||||||||
| Total gross margin |
33.7 | % | 38.1 | % | ||||||||||||
| Three Months Ended |
||||||||||||||||
| June 30, |
Variance |
|||||||||||||||
| 2025 |
2024 |
$ |
% |
|||||||||||||
| Revenues by Geographic Area: |
||||||||||||||||
| United States |
||||||||||||||||
| Product sales |
$ | 11,930 | $ | 8,550 | $ | 3,380 | 39.5 | % | ||||||||
| Services |
1,682 | 3,241 | (1,559 | ) | (48.1 | )% | ||||||||||
| Total United States |
13,612 | 11,791 | 1,821 | 15.4 | % | |||||||||||
| Canada |
||||||||||||||||
| Product sales |
13,021 | 8,263 | 4,758 | 57.6 | % | |||||||||||
| Services |
4,948 | 3,795 | 1,153 | 30.4 | % | |||||||||||
| Total Canada |
17,969 | 12,058 | 5,911 | 49.0 | % | |||||||||||
| Other Countries |
||||||||||||||||
| Product sales |
2,825 | 2,209 | 616 | 27.9 | % | |||||||||||
| Services |
2,048 | 3,632 | (1,584 | ) | (43.6 | )% | ||||||||||
| Total other countries |
4,873 | 5,841 | (968 | ) | (16.6 | )% | ||||||||||
| Total |
||||||||||||||||
| Product sales |
27,776 | 19,022 | 8,754 | 46.0 | % | |||||||||||
| Services |
8,678 | 10,668 | (1,990 | ) | (18.7 | )% | ||||||||||
| Total revenues |
$ | 36,454 | $ | 29,690 | $ | 6,764 | 22.8 | % | ||||||||
Revenues
Revenues were $36.5 million for the three months ended June 30, 2025 compared to $29.7 million for the three months ended June 30, 2024. Revenue growth was driven primarily by an increase in product sales in Canada and the United States, associated with increased fracturing systems activity, as well as an increase in frac plug sales by Repeat Precision in the United States. The increase for Canada occurred despite a decline in Canadian rig counts during 2025, reflecting more activity with customers that remained active during spring break-up. Our international product sales increased primarily due to higher sales of well construction products in the Middle East and fracturing systems equipment in the North Sea. Services revenue increased in Canada due to higher fracturing systems service activity, partially offset by decreases in the United States and internationally, primarily associated with the timing of tracer diagnostics projects. Overall, product sales for the three months ended June 30, 2025 totaled $27.8 million compared to $19.0 million for the three months ended June 30, 2024. Services revenue totaled $8.7 million compared to $10.7 million for the same periods.
Cost of sales was $24.2 million, or 66.3% of revenues, for the three months ended June 30, 2025, compared to $18.4 million, or 61.9% of revenues, for the three months ended June 30, 2024. Product cost of sales as a percentage of revenues increased slightly during the respective periods, reflecting the mix of products sold. Cost of services as a percentage of revenues increased for the three months ended June 30, 2025 compared to the same period in 2024, due primarily to the mix of fracturing systems service revenue and tracer diagnostics revenue, as the second quarter of 2025 was more heavily weighted to fracturing systems service which requires more labor and direct costs depending on the complexity and duration of the fracturing systems jobs, while the second quarter of 2024 was more heavily weighted to tracer diagnostics jobs, specifically a large project in Saudi for which lower costs of chemicals was incurred and less labor was required based on the stage of the project as of June 30, 2024. For the three months ended June 30, 2025, cost of product sales was $18.7 million, or 67.4% of product sales revenue, and cost of services was $5.5 million, or 63.0% of services revenue. For the three months ended June 30, 2024, cost of product sales was $12.7 million, or 66.6% of product sales revenue, and cost of services was $5.7 million, or 53.5% of services revenue.
Selling, general and administrative expenses
Selling, general and administrative expenses were $13.6 million for the three months ended June 30, 2025, compared to $14.8 million for the three months ended June 30, 2024. The primary drivers of the decrease in expense includes lower professional fees of $0.6 million, lower payroll and employee benefit expenses of $0.4 million, and a decrease in research and development expense of $0.2 million, partially offset by higher share-based compensation expense of $0.2 million attributable to cash settled awards remeasured at the balance sheet date based on the price of our common stock.
Other income, net
Other income, net was $1.6 million for the three months ended June 30, 2025, compared to $2.2 million for the three months ended June 30, 2024. The decline in other income reflects a reduction in the amount attributable to the technical services and assistance agreement with our local partner in Oman, as the program ended in November 2024, with no contribution associated with this agreement in the second quarter of 2025. In addition, there was a year-over-year decrease in royalty income earned from licensees for these periods, as the second quarter of 2024 included an initial payment from a new licensee reflecting both current and certain historical volumes.
Foreign currency exchange gain (loss), net
Foreign currency exchange gain (loss), net was $1.2 million for the three months ended June 30, 2025 compared to $(0.5) million for the three months ended June 30, 2024. The change was due to the movement in the foreign currency exchange rates during the periods, primarily the impact of the Canadian dollar relative to the U.S. dollar.
Income tax (benefit) expense
Income tax (benefit) expense was $(1.0) million for the three months ended June 30, 2025 as compared to $0.3 million for the three months ended June 30, 2024. Our effective tax rate (“ETR”) from continuing operations was (155.0%) and (10.5%) for the three months ended June 30, 2025 and 2024, respectively. The income tax (benefit) expense for these periods primarily relates to results generated by our United States, Canada, and certain other foreign businesses, and the income tax provision for each three-month period excludes the effects of losses within the United States, Canada, or other jurisdictions, if any, from which we cannot currently benefit. In addition, the income tax provision includes the effects of changes in valuation allowances established against our previously recognized deferred tax assets, some of which were derived from net operating loss carryforwards in the United States, Canada, or other jurisdictions. Therefore, significant variations exist in the customary relationship between income tax expense and pretax book income for the three month periods ended June 30, 2025 and 2024. As of June 30, 2025, we reversed a portion of the valuation allowance previously recorded against the deferred tax assets of our Canadian operating subsidiary due to sustained improvements in operating results, including a return to profitability and forecasts of future taxable income that are sufficient to realize the remaining deferred tax assets. The reversal of the valuation allowance resulted in a deferred income tax benefit of $1.4 million during the period ended June 30, 2025.
Results of Operations
Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024
The following tables summarize our results of operations, gross margins and revenues by geographic area for the periods presented (dollars in thousands):
| Six Months Ended |
||||||||||||||||
| June 30, |
Variance |
|||||||||||||||
| 2025 |
2024 |
$ |
% (1) |
|||||||||||||
| Revenues |
||||||||||||||||
| Product sales |
$ | 62,842 | $ | 50,780 | $ | 12,062 | 23.8 | % | ||||||||
| Services |
23,617 | 22,768 | 849 | 3.7 | % | |||||||||||
| Total revenues |
86,459 | 73,548 | 12,911 | 17.6 | % | |||||||||||
| Cost of sales |
||||||||||||||||
| Cost of product sales, exclusive of depreciation and amortization expense shown below |
38,566 | 31,901 | 6,665 | 20.9 | % | |||||||||||
| Cost of services, exclusive of depreciation and amortization expense shown below |
13,040 | 12,105 | 935 | 7.7 | % | |||||||||||
| Total cost of sales, exclusive of depreciation and amortization expense shown below |
51,606 | 44,006 | 7,600 | 17.3 | % | |||||||||||
| Selling, general and administrative expenses |
29,821 | 28,650 | 1,171 | 4.1 | % | |||||||||||
| Depreciation |
2,439 | 2,207 | 232 | 10.5 | % | |||||||||||
| Amortization |
334 | 334 | — | — | % | |||||||||||
| Income (loss) from operations |
2,259 | (1,649 | ) | 3,908 | 237.0 | % | ||||||||||
| Other income (expense) |
||||||||||||||||
| Interest expense, net |
(110 | ) | (215 | ) | 105 | 48.8 | % | |||||||||
| Other income, net |
2,446 | 3,340 | (894 | ) | (26.8 | )% | ||||||||||
| Foreign currency exchange gain (loss), net |
1,198 | (1,005 | ) | 2,203 | 219.2 | % | ||||||||||
| Total other income |
3,534 | 2,120 | 1,414 | 66.7 | % | |||||||||||
| Income before income tax |
5,793 | 471 | 5,322 | NM | ||||||||||||
| Income tax (benefit) expense |
(359 | ) | 757 | (1,116 | ) | (147.4 | )% | |||||||||
| Net income (loss) |
6,152 | (286 | ) | 6,438 | NM | |||||||||||
| Net income attributable to non-controlling interest |
1,172 | 739 | 433 | 58.6 | % | |||||||||||
| Net income (loss) attributable to NCS Multistage Holdings, Inc. |
$ | 4,980 | $ | (1,025 | ) | $ | 6,005 | 585.9 | % | |||||||
| (1) |
NM — Percentage not meaningful |
| Six Months Ended |
||||||||||||||||
| June 30, |
Variance |
|||||||||||||||
| 2025 |
2024 |
$ |
% |
|||||||||||||
| Gross Margin and Gross Margin Percentage: |
||||||||||||||||
| Cost of product sales, exclusive of depreciation and amortization expense |
$ | 38,566 | $ | 31,901 | $ | 6,665 | 20.9 | % | ||||||||
| Depreciation and amortization attributable to cost of product sales |
1,008 | 927 | 81 | 8.7 | % | |||||||||||
| Cost of product sales |
39,574 | 32,828 | 6,746 | 20.5 | % | |||||||||||
| Product sales gross profit |
$ | 23,268 | $ | 17,952 | $ | 5,316 | 29.6 | % | ||||||||
| Product sales gross margin |
37.0 | % | 35.4 | % | ||||||||||||
| Cost of services, exclusive of depreciation and amortization expense |
$ | 13,040 | $ | 12,105 | $ | 935 | 7.7 | % | ||||||||
| Depreciation and amortization attributable to cost of services |
436 | 342 | 94 | 27.5 | % | |||||||||||
| Cost of services |
13,476 | 12,447 | 1,029 | 8.3 | % | |||||||||||
| Services gross profit |
$ | 10,141 | $ | 10,321 | $ | (180 | ) | (1.7 | )% | |||||||
| Services gross margin |
42.9 | % | 45.3 | % | ||||||||||||
| Total cost of sales |
$ | 53,050 | $ | 45,275 | $ | 7,775 | 17.2 | % | ||||||||
| Total gross profit |
$ | 33,409 | $ | 28,273 | $ | 5,136 | 18.2 | % | ||||||||
| Total gross margin |
38.6 | % | 38.4 | % | ||||||||||||
| Six Months Ended |
||||||||||||||||
| June 30, |
Variance |
|||||||||||||||
| 2025 |
2024 |
$ |
% |
|||||||||||||
| Revenues by Geographic Area: |
||||||||||||||||
| United States |
||||||||||||||||
| Product sales |
$ | 18,797 | $ | 16,317 | $ | 2,480 | 15.2 | % | ||||||||
| Services |
4,187 | 5,485 | (1,298 | ) | (23.7 | )% | ||||||||||
| Total United States |
22,984 | 21,802 | 1,182 | 5.4 | % | |||||||||||
| Canada |
||||||||||||||||
| Product sales |
39,864 | 30,938 | 8,926 | 28.9 | % | |||||||||||
| Services |
15,823 | 12,789 | 3,034 | 23.7 | % | |||||||||||
| Total Canada |
55,687 | 43,727 | 11,960 | 27.4 | % | |||||||||||
| Other Countries |
||||||||||||||||
| Product sales |
4,181 | 3,525 | 656 | 18.6 | % | |||||||||||
| Services |
3,607 | 4,494 | (887 | ) | (19.7 | )% | ||||||||||
| Total other countries |
7,788 | 8,019 | (231 | ) | (2.9 | )% | ||||||||||
| Total |
||||||||||||||||
| Product sales |
62,842 | 50,780 | 12,062 | 23.8 | % | |||||||||||
| Services |
23,617 | 22,768 | 849 | 3.7 | % | |||||||||||
| Total revenues |
$ | 86,459 | $ | 73,548 | $ | 12,911 | 17.6 | % | ||||||||
Revenues
Revenues were $86.5 million for the six months ended June 30, 2025 compared to $73.5 million for the six months ended June 30, 2024. Revenue growth was driven primarily by an increase in product sales in the United States, Canada and internationally. In the United States, this increase was largely attributable to second quarter fracturing systems completion equipment sales associated with two large projects. For Canada, the increase in product and service sales reflects robust activity levels, particularly for fracturing systems completions, a trend that began in the fourth quarter of 2024 and continued throughout the first half of 2025, despite a decline in Canadian rig count, reflecting additional service work in more active regions including the Montney. The increase in international product sales was driven by projects in both the Middle East and North Sea, with a decrease in international services revenue from tracer diagnostics, as the second quarter of the prior year included higher services revenue associated with a large project. Overall, product sales for the six months ended June 30, 2025 totaled $62.8 million compared to $50.8 million for the six months ended June 30, 2024. Services revenue totaled $23.6 million compared to $22.8 million for the same periods.
Cost of sales was $53.1 million, or 61.4% of revenues, for the six months ended June 30, 2025, compared to $45.3 million, or 61.6% of revenues, for the six months ended June 30, 2024. Overall, cost of sales as a percentage of revenues was consistent for these periods, although product margins improved and service margins declined. Product margin is impacted by the product mix which reflects the jobs completed which may vary in size, complexity and lateral length, as well as the job type which may include wellbore construction services, completion equipment or traditional plug and perforation work. In addition, there was an increase in international fracturing systems jobs in the North Sea in 2025 compared to 2024, which tend to have more favorable margins. Service margins declined in the United States and internationally, primarily associated with timing of tracer diagnostics jobs and the number of fracturing service jobs. For the six months ended June 30, 2025, cost of product sales was $39.6 million, or 63.0% of product sales revenue, and cost of services was $13.5 million, or 57.1% of services revenue. For the six months ended June 30, 2024, cost of product sales was $32.8 million, or 64.6% of product sales revenue, and cost of services was $12.5 million, or 54.7% of services revenue.
Selling, general and administrative expenses
Selling, general and administrative expenses were $29.8 million for the six months ended June 30, 2025, compared to $28.7 million for the six months ended June 30, 2024. This increase in expense reflects an incremental $0.9 million associated with annual incentive bonus accruals, and higher share-based compensation expense of $0.8 million attributable to cash settled awards, which are remeasured at the balance sheet date based on the price of our common stock, partially offset by slight decreases in expense for rent, professional fees, insurance, and research and development costs.
Other income, net
Other income, net was $2.4 million for the six months ended June 30, 2025, compared to $3.3 million for the six months ended June 30, 2024. The decline in other income reflects a reduction in the amount attributable to the technical services and assistance agreement with our local partner in Oman, as the program ended in November 2024, so there is no contribution associated with this agreement for the first six months of 2025.
Foreign currency exchange gain (loss), net
Foreign currency exchange gain (loss), net was $1.2 million for the six months ended June 30, 2025 compared to $(1.0) million for the six months ended June 30, 2024. The change was due to the movement in the foreign currency exchange rates during the periods, primarily the impact of the Canadian dollar relative to the U.S. dollar.
Income tax (benefit) expense
Income tax (benefit) expense was $(0.4) million for the six months ended June 30, 2025 as compared to $0.8 million for the six months ended June 30, 2024. Our ETR from continuing operations was (6.2%) and 160.7% for the six months ended June 30, 2025 and 2024, respectively. The income tax (benefit) expense for these periods primarily relates to results generated by our United States, Canada, and certain other foreign businesses, and the income tax provision for each six-month period excludes the effects of losses within the United States, Canada, or other jurisdictions, if any, from which we cannot currently benefit. In addition, the income tax provision includes the effects of changes in valuation allowances established against our previously recognized deferred tax assets, some of which were derived from net operating loss carryforwards in the United States, Canada, or other jurisdictions. Therefore, significant variations exist in the customary relationship between income tax expense and pretax book income for the six month periods ended June 30, 2025 and 2024. As of June 30, 2025, we reversed a portion of the valuation allowance previously recorded against the deferred tax assets of our Canadian operating subsidiary due to sustained improvements in operating results, including a return to profitability and forecasts of future taxable income that are sufficient to realize the remaining deferred tax assets. The reversal of the valuation allowance resulted in a deferred income tax benefit of $1.4 million during the period ended June 30, 2025.
Liquidity and Capital Resources
Our primary sources of liquidity are our existing cash and cash equivalents, cash flows from operations and potential borrowings under our secured asset-based revolving credit facility (the “ABL Facility”). As of June 30, 2025, we had cash and cash equivalents of $25.4 million, and total outstanding indebtedness of $7.7 million related to finance lease obligations. Our ABL Facility consists of an asset-based revolving credit facility in an aggregate principal amount of $35.0 million. Total borrowings are limited to a borrowing base calculated on the eligible accounts receivable and eligible inventory, provided it does not include credit for the assets of Repeat Precision. At June 30, 2025, our available borrowing base under the ABL Facility was $17.2 million, with no outstanding borrowings. The amount available to be drawn under the ABL Facility may decline from current levels due to reductions in our borrowing base or a springing financial covenant if our business were to be adversely impacted by a decline in market conditions. We were in compliance with our debt covenants at June 30, 2025.
In addition, Repeat Precision’s promissory note with Security State Bank & Trust, Fredericksburg (the “Repeat Precision Promissory Note”) has total aggregate borrowing capacity of $2.5 million with a maturity date in May 2026, and has no borrowings outstanding as of June 30, 2025.
We believe that our cash on hand, cash flows from operations and potential borrowings under our ABL Facility will be sufficient to fund our capital expenditure and liquidity requirements for the next twelve months and after. Our principal liquidity needs have been, and are expected to continue to be, capital expenditures, working capital, debt service and potential mergers and acquisitions.
Our capital expenditures for each of the six months ended June 30, 2025 and 2024 were $0.7 million, respectively. We plan to incur approximately $1.4 million to $1.6 million in capital expenditures in total during 2025, which includes (i) upgrades to our manufacturing and field service equipment to support North American fracturing systems and well construction businesses, (ii) upgrades to our tracer diagnostics deployment, sampling and laboratory equipment and (iii) upgrades to our Repeat Precision manufacturing facilities.
To the extent we require additional liquidity to fund our capital requirements, including our finance lease obligations, or repay existing indebtedness, we would expect to obtain it through the incurrence of additional indebtedness, the proceeds of equity issuances, or a combination thereof. Our liquidity and ability to meet our obligations and fund capital requirements also depend on our future financial performance including the ability to manage costs, which is subject to general economic, financial and other factors that are beyond our control. Accordingly, we cannot provide assurance that our business will generate sufficient cash flow from operations or that funds will be available from additional indebtedness, the capital markets or otherwise to meet our liquidity needs. If we decide to pursue one or more significant acquisitions, we may incur additional debt or sell equity to finance such acquisitions, which could result in incremental expenses or dilution.
Cash Flows
The following table provides a summary of cash flows from operating, investing and financing activities for the periods presented (in thousands):
| Six Months Ended |
||||||||
| June 30, |
||||||||
| 2025 |
2024 |
|||||||
| Net cash provided by operating activities |
$ | 1,876 | $ | 4,099 | ||||
| Net cash used in investing activities |
(474 | ) | (393 | ) | ||||
| Net cash used in financing activities |
(2,240 | ) | (1,669 | ) | ||||
| Effect of exchange rate changes on cash and cash equivalents |
330 | (143 | ) | |||||
| Net change in cash and cash equivalents |
$ | (508 | ) | $ | 1,894 | |||
Operating Activities
Net cash provided by operating activities was $1.9 million and $4.1 million for the six months ended June 30, 2025 and 2024, respectively. The reduction in operating cash flow for the first six months of 2025 reflected higher cash payments for incentive bonuses, and higher payments related to the vesting of cash settled share-based awards, which are remeasured based on the price of our common stock, partially offset by an increase in net income of $6.4 million. Additionally, the revenue increase for the first six months of 2025 compared to the same period in 2024 impacted our working capital, including the timing of trade receivable billings and collections, inventory levels and payments for materials and other components.
Investing Activities
Net cash used in investing activities was $0.5 million and $0.4 million for the six months ended June 30, 2025 and 2024, respectively, reflecting consistent investment in property and equipment for these periods, net of proceeds received from the sale of retired property and equipment.
Financing Activities
Net cash used in financing activities was $2.2 million and $1.7 million for the six months ended June 30, 2025 and 2024. Our primary uses of funds for the six months ended June 30, 2025 and 2024 were principal payments related to our finance lease obligations totaling $1.1 million and $0.9 million, respectively, payments of $0.3 million and $0.2 million, respectively, for treasury shares withheld to settle withholding tax requirements for equity-settled awards, and a distribution of $0.9 million and $0.5 million, respectively, to our joint venture partner. Net borrowings and repayments under the Repeat Promissory Note had no relative impact on cash flows from financing activities for each of the six months ended June 30, 2025 and 2024.
Material Cash Requirements
There have been no significant changes in our material cash requirements from those disclosed in the Annual Report for the year ended December 31, 2024. See “Note 14. Subsequent Event” to our unaudited condensed consolidated financial statements for a discussion of an acquisition utilizing cash on hand as of July 31, 2025.
Critical Accounting Estimates
There are no material changes to our critical accounting estimates from those included in the Annual Report for the year ended December 31, 2024.
Recently Issued Accounting Pronouncements
See “Note 1. Basis of Presentation” to our unaudited condensed consolidated financial statements for a discussion of the recent accounting pronouncements issued by the Financial Accounting Standards Board.
Smaller Reporting Company Status
We are a “smaller reporting company” as defined by Section 12b-2 of the Exchange Act, meaning that we are not an investment company, an asset-backed issuer, or a majority-owned subsidiary of a parent company that is not a smaller reporting company and have a public float of less than $250 million. As a smaller reporting company, we may take advantage of specified reduced reporting and other burdens that are otherwise applicable generally to public companies that do not qualify for the classification, including among other things, providing only two years of audited financial statements.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report includes certain forward-looking statements within the meaning 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, such as those contained in Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
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 E&P 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; |
| ● |
change in trade policy, including the impact of tariffs; |
| ● |
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; |
| ● |
failure to comply with or changes to federal, state and local and non-U.S. laws and other regulations, including tax policies, anti-corruption and environmental regulations, guidelines and regulations for the use of explosives; |
| ● |
impairment in the carrying value of long-lived assets including goodwill; |
| ● |
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 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 and the adoption of artificial intelligence and machine learning; |
| ● |
our inability to protect and maintain critical intellectual property assets, the inability to protect our current royalty income, or the losses and liabilities from adverse decisions in intellectual property disputes; |
| ● |
loss of, or interruption to, our information and computer systems; |
| ● |
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. |
For the reasons described above, as well as factors identified in “Item 1A. Risk Factors” in this Quarterly Report and the section of the Annual Report entitled “Risk Factors,” we caution you against relying on any forward-looking statements. Any forward-looking statement made by us in this Quarterly Report 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.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
For our quantitative and qualitative disclosures about market risk, see Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” in our Annual Report for the year ended December 31, 2024. Our exposure to market risk has not changed materially since December 31, 2024, however, in May 2025, two of our largest customers completed a business combination and the combined entity constituted 17% of our trade receivables as of June 30, 2025.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, including our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of June 30, 2025. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer, concluded that, as of June 30, 2025, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
There were no changes to our internal control over financial reporting that occurred during the quarter ended June 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
See “Note 10. Commitments and Contingencies” of our unaudited condensed consolidated financial statements for further information regarding our legal proceedings.
There have been no material changes from the risk factors disclosed in our Annual Report for the year ended December 31, 2024.
During the quarter ended June 30, 2025, director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K.
| Exhibit |
|||
| No. |
Description |
||
| † | 10.1 | Amended and Restated 2017 Equity Incentive Plan (incorporated by reference to Annex A to the Company's Proxy Statement (File No. 001-38071) filed on April 8, 2025). | |
| * |
31.1 |
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
| * |
31.2 |
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
| ** |
32.1 |
Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
| ** |
32.2 |
Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
| *** |
101.INS |
Inline XBRL Instance Document |
|
| *** |
101.SCH |
Inline XBRL Taxonomy Extension Schema |
|
| *** |
101.CAL |
Inline XBRL Taxonomy Extension Calculation Linkbase |
|
| *** |
101.DEF |
Inline XBRL Taxonomy Extension Definition Linkbase |
|
| *** |
101.LAB |
Inline XBRL Taxonomy Extension Label Linkbase |
|
| *** |
101.PRE |
Inline XBRL Taxonomy Extension Presentation Linkbase |
|
| *** |
104 |
Cover Page Interactive Data File (formatted in Inline iXBRL and contained in Exhibit 101) |
|
| † | Management contracts or compensatory plans or arrangements. | ||
| * |
Filed herewith. |
||
| ** |
Furnished herewith. |
||
| *** |
Submitted electronically with this Report. |
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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Date: August 1, 2025 |
NCS Multistage Holdings, Inc. |
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| By: |
/s/ Mike Morrison |
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| Mike Morrison |
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| Chief Financial Officer and Treasurer |
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| (Principal Financial Officer and Authorized Signatory) |
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