NCS Multistage’s Q1 Surge: A Strong Start to 2025 Amid Global Uncertainties

NCS Multistage Holdings (NASDAQ: NCSM) delivered a robust first-quarter 2025 performance, with revenue and earnings far exceeding expectations. The company reported $50.0 million in revenue, a 14% year-over-year (YoY) increase, driven by surging Canadian sales and high-margin international projects. Earnings per share (EPS) soared to $1.51, nearly doubling from $0.82 in Q1 2024, while adjusted EBITDA rose 35% to $8.2 million. This strong start positions NCS Multistage as a resilient player in oilfield services, though geopolitical risks and trade tensions loom large.

Revenue Growth: Canada Leads, International Markets Lag

NCS Multistage’s Q1 success hinged on its Canadian operations, where product sales jumped 26% sequentially to $26.8 million, fueled by strong fracturing systems completions activity. Services revenue in Canada also rose 22% to $10.9 million, reflecting heightened demand for its engineered solutions. Internationally, the company secured wins in the North Sea and Middle East, though delays in some projects caused international revenue to fall 34% sequentially to $2.9 million. U.S. sales dipped 13% YoY to $9.4 million due to project delays, underscoring regional volatility.

Margin Expansion and Operational Efficiency

The company’s gross margin improved to 42% in Q1 2025 from 39% in Q1 2024, with adjusted margins hitting 44%—a 400-basis-point expansion over two years. This was driven by higher-margin international work and operational efficiencies, including supply chain optimizations and lean manufacturing. CEO Ryan Hummer emphasized that these improvements reflect a “strategic focus on high-value projects,” which are critical as trade tensions and tariffs threaten to raise input costs.

Liquidity and Balance Sheet Strength

NCS Multistage ended Q1 with a net cash position of $15.4 million, up from $7.6 million in debt a year earlier. Total liquidity reached $49.8 million, including an undrawn $26.8 million revolving credit facility, providing ample flexibility for opportunistic investments or risk mitigation. While cash flow from operations remained negative ($1.6 million), it improved slightly from $1.8 million in Q1 2024, aided by better working capital management.

Risks and Challenges Ahead

Despite the positive results, global trade tensions and tariffs pose significant risks. The company noted that U.S. tariffs on Chinese steel and imports could increase costs, while retaliatory measures might dampen drilling activity in key markets. The delayed Middle East projects highlight execution risks in international markets, where timing and geopolitical stability are critical.

Conclusion: A Resilient Operator with Mixed Headwinds

NCS Multistage’s Q1 results underscore its ability to capitalize on high-margin opportunities while maintaining a strong balance sheet. With a 14% revenue growth, 95% net income increase, and a net cash position of $15.4 million, the company is well-positioned to navigate near-term headwinds. However, investors must weigh its growth in Canada and international markets against the risks of trade wars and project delays.

The stock’s performance over the past year (see chart above) reflects this tension, with gains in late 2024 now tempered by broader market caution. For long-term investors, NCS Multistage’s focus on unconventional well completions—a cornerstone of global oil and gas production—provides a compelling thesis, provided the company can mitigate cost pressures and project delays. As Hummer noted, “Our capital-light model and geographic diversification give us the agility to adapt.” For now, NCS Multistage is a solid bet on energy infrastructure resilience, but success hinges on execution amid an uncertain macro backdrop.