• Fourth Quarter Revenue: $45.0 million, a 20% increase year-over-year.
• Full Year 2024 Revenue: $162.6 million, a 14% increase compared to 2023.
• International Revenue Growth: Increased from 5% to 10% of total revenue in 2024.
• Adjusted Gross Margin (Q4 2024): 43%, up from 37% in Q4 2023.
• Adjusted Gross Margin (Full Year 2024): Improved to 41% from 39% in 2023.
• Net Income (Q4 2024): $3.5 million or $1.32 per diluted share.
• Net Income (Full Year 2024): $6.6 million or $2.55 per diluted share.
• Adjusted EBITDA (Q4 2024): $8.2 million, up from $2.5 million in Q4 2023.
• Adjusted EBITDA (Full Year 2024): $22.3 million, up from $11.9 million in 2023.
• Free Cash Flow (2024): Approximately $12 million, with $10 million after distributions to noncontrolling interest.
• Cash Position (End of 2024): $25.9 million with a net cash position of $17.7 million.
• First Quarter 2025 Revenue Guidance: $42 million to $46 million.
• First Quarter 2025 Adjusted Gross Margin Guidance: 39% to 42%.
• First Quarter 2025 Adjusted EBITDA Guidance: $4.5 million to $6.5 million.
• Full Year 2025 Revenue Guidance: $165 million to $175 million.
• Full Year 2025 Adjusted EBITDA Guidance: $20 million to $23 million.

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

Release Date: March 11, 2025

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

Positive Points

• NCS Multistage Holdings Inc (NASDAQ:NCSM) achieved a 20% increase in fourth-quarter revenues compared to the previous year, with significant contributions from international markets.
• The company reported its highest-ever revenue outside of North America, doubling its international revenue from 5% to 10% of total revenue in 2024.
• NCSM improved its adjusted gross margin by 250 basis points in 2024, driven by higher-margin international revenues and operational leverage.
• The company generated approximately $12 million in free cash flow in 2024, reflecting strong financial performance and cash conversion.
• NCSM ended 2024 with a positive net cash position of $17.7 million and a strong liquidity position, enhancing its financial flexibility for future investments.

Negative Points

• The strengthening of the US dollar relative to the Canadian dollar negatively impacted NCSM's revenue and adjusted EBITDA guidance for 2025.
• The company anticipates flat to down customer activity in the United States for 2025, which could affect overall revenue growth.
• NCSM's selling, general, and administrative costs increased by $1.8 million in the fourth quarter due to higher incentive bonus accruals and share-based compensation expenses.
• The company's adjusted EBITDA guidance for 2025 is negatively impacted by a forecasted reduction in other income.
• NCSM faces potential risks from trade actions and tariffs, which could affect raw material costs and overall financial performance.

Q & A Highlights

Q: Is there any early indication on the spring breakup in Canada, and should we expect any seasonal variance going into 2025? A: We expect the impacts of seasonality in 2025 to mimic what was seen in 2024. While the start of the year was strong, typical seasonality is anticipated, with activity likely decreasing in late March and picking up again in June. Weather conditions will play a significant role, as they did in 2024.

Q: What factors contributed to the consolidated margin expansion year over year? A: The margin expansion was driven by three main factors: international expansion, overall operating leverage from a 14% revenue growth, and cost reduction actions taken in 2023. These factors collectively contributed to a 250 basis point increase in margins.

Q: Are there any small tech-related businesses that could be potential acquisition targets for NCS? A: Yes, NCS is actively looking at M&A opportunities, particularly those with a strategic fit and operational logic. The focus is on businesses that can bring technology with traction in the US, which can be expanded into Canada and international markets.

Q: Is there any R&D work that could lead to new market offerings in the near future? A: Yes, NCS is working on exciting R&D projects, some of which are nearing the prototype stage. These projects aim to open new market segments and involve both internally developed technologies and partnerships with other companies.

Q: What is the guidance for NCS Multistage's financial performance in 2025? A: For 2025, NCS expects full-year revenue to range from $165 million to $175 million, with adjusted EBITDA between $20 million and $23 million. Revenue growth is anticipated in Canada, the US, and international markets, although FX impacts may affect margins.

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