• Revenue: $44 million for Q3 2024, a 15% increase year-over-year.

• First Nine Months Revenue: $118 million, a 10% increase over the same period last year.

• Adjusted Gross Margin: 42% for Q3 2024.

• SG&A Expense: $14.1 million for Q3 2024, $1.5 million higher than Q3 2023.

• Adjusted EBITDA: $7.1 million for Q3 2024, exceeding the guided range of $5 to $7 million.

• Net Income: $4.1 million for Q3 2024, or $1.60 per diluted share.

• Cash Balance: $15.3 million as of September 30, 2024.

• Total Liquidity: Over $37 million as of September 30, 2024.

• Free Cash Flow: $0.4 million for the first nine months of 2024, an improvement of $3.3 million year-over-year.

• International Revenue: $12 million for the first nine months of 2024, exceeding full-year 2023 international revenue.

• Fourth Quarter Revenue Guidance: $38 to $42 million.

• Full Year Revenue Guidance: $155.5 to $159.5 million, an 11% increase compared to 2023.

• Full Year Adjusted EBITDA Guidance: $18 to $20.5 million.

• Net Capital Expenditures for 2024: Approximately $1.2 million.

• Expected Free Cash Flow for 2024: $6 to $10 million.

• Warning! GuruFocus has detected 5 Warning Signs with NCSM.

Release Date: October 31, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• NCS Multistage Holdings Inc (NASDAQ:NCSM) reported a 15% increase in third-quarter revenue, reaching $44 million, which was at the high end of their guidance range.

• The company's adjusted EBITDA for the third quarter was $7.1 million, exceeding their guided range and showing an improvement over the previous year.

• International revenue for the first nine months of 2024 has already surpassed the full-year 2023 figures, indicating strong growth in overseas markets.

• NCSM's balance sheet remains robust with a cash balance of $15.3 million and total liquidity exceeding $37 million.

• The company is successfully expanding its market presence with innovative solutions, such as the sliding sleeve technology for seismic event mitigation and tracer diagnostics in geothermal and carbon capture projects.

Negative Points

• SG&A expenses increased by $1.5 million in the third quarter compared to the same period last year, primarily due to higher incentive bonus accruals.

• International revenue saw a sequential decline of 31% in the third quarter, mainly due to the timing of tracer service work in the Middle East.

• Despite revenue growth, the company's trading multiple remains low, at three times enterprise value to 2024 adjusted EBITDA, which is below the peer median.

• The company faces challenges in maintaining cost structure improvements, as most low-hanging cost reduction opportunities have already been captured.

• NCSM's revenue guidance for the fourth quarter indicates a potential decrease compared to the third quarter, with expected revenues ranging from $38 to $42 million.