NCS Multistage (NCSM) Q4 2023 earnings summary

Executive summary

• FY 2023 revenue declined 8% to $142.5 million from $155.6 million; Adjusted EBITDA fell to $11.9 million from $15.1 million.

• Q4 net income of $39.6 million and diluted EPS of $15.80 reflected reversal of a $40.8 million litigation provision; adjusted net loss was $0.9 million, or $0.36 per share.

• FY 2024 guidance: revenue of $145–$160 million, Adjusted EBITDA of $13–$17 million and positive Free Cash Flow.

• Priorities include international and offshore expansion, innovative product and service offerings, and returning to revenue growth in 2024.

Financial highlights

• Q4 revenue was $35.2 million, down 12% YoY; reported gross profit was $12.3 million at a 35% margin, while Adjusted gross margin was 37%.

• Q4 Adjusted EBITDA was $2.5 million versus $6.4 million; Adjusted net loss was $0.9 million, or $0.36 per share, versus adjusted net income of $1.8 million, or $0.75 per share.

• FY net loss was $3.2 million, or $1.27 per share; Adjusted net loss was $1.3 million, or $0.51 per share.

• FY Adjusted gross profit was $55.6 million at a 39% margin, unchanged YoY; Adjusted EBITDA margin was 8%, versus 10% in 2022.

• FY Free Cash Flow was $3.1 million; Q4 Free Cash Flow was $6.1 million.

Outlook and guidance

• Q1 2024 guidance: revenue of $36–$40 million, Adjusted gross margin of 38%–41%, Adjusted EBITDA of $3–$4 million and D&A expense of $1.2 million.

• FY 2024 guidance: revenue of $145–$160 million, up 7% at the midpoint; Adjusted EBITDA of $13–$17 million, up 26% at the midpoint.

• FY 2024 gross capital expenditures are expected at $2–$3 million, with positive Free Cash Flow.

• 2024 activity expectations: flat or slightly lower in Canada, down 5%–10% in the U.S. and up 5%–10% internationally; revenue is expected to improve, particularly in the U.S. and internationally.

• Growth drivers include North Sea work, a Middle East tracer diagnostics project and higher Repeat Precision sales tied to Permian activity.