NCS Multistage's Q3 2025: Contradictions Emerge on ResMetrix Integration, North Sea Expansion, M&A Strategy, Market Behavior, and Pricing Pressures

Date of Call: October 30, 2025

Financials Results

• Revenue: $46.5M for Q3, up 6% YOY, exceeded midpoint of guidance
• EPS: $1.37 diluted EPS for Q3, compared with $1.60 in Q3 prior year (net income $3.8M vs $4.1M)
• Gross Margin: Adjusted gross margin 42%, consistent with prior year

Guidance:

• Q4 revenue expected $41M–$45M with Canada $23M–$25M, U.S. (incl. ResMetrix) $15M–$16M, international $3M–$4M.
• Q4 adjusted gross margin 40%–42%; adjusted EBITDA $5M–$6.5M; Q4 D&A ~ $1.6M.
• 2025 full-year revenue expected $174M–$178M (≈+8% YOY; ~5% organic, ~3% ResMetrix).
• Pro forma combined adjusted EBITDA $22.5M–$24M (midpoint $23.25M).
• 2025 free cash flow after distributions (ex-ResMetrix acquisition cash) expected $11M–$13M.

Business Commentary:

• Revenue Growth and ResMetrix Integration:
• NCS Multistage reported revenue of $46.5 million for Q3, exceeding the midpoint of the guided range, with U.S. revenue increasing by 26% sequentially and 54% year-over-year.

• The growth was driven by the expected contribution from ResMetrix and robust performance across fracturing services, fracturing systems, and tracer diagnostics product lines.

• Cash Flow Improvement:

• The company generated $6.8 million in free cash flow after distributions to noncontrolling interest during the first 9 months of 2025, an improvement of $6.5 million compared to the same period of the prior year.

• This improvement is attributed to stronger operational performance and the integration of ResMetrix's cash flow into NCS's operations.

• International Expansion:

• International revenue reached 10% of total revenue in 2024, marking a significant milestone for NCS.

• Growth in international markets was supported by the North Sea's success, and the company is expanding its presence in markets like Alaska and heavy oil regions, presenting high-margin growth opportunities.

• Product Innovation and Market Development:

• NCS is advancing field trials for new products and entering new markets, including showcasing Luminate multi-day composite sampling units and manufacturing ATRS AICV sliding sleeves.
• Technological developments and introductions of new products are central to NCS's strategy to meet customer challenges and expand its addressable market.

Sentiment Analysis:

Overall Tone: Positive

• Management emphasized that Q3 revenue of $46.5M exceeded the midpoint of guidance, adjusted EBITDA for the first 9 months rose 24% YOY, cash exceeded $25M, and they raised free cash flow expectations to $11M–$13M for 2025 while noting cautious market conditions.

Q&A:

• Question from Colby Sasso (Daniel Energy Partners): It sounds like your integration of ResMetrix is going really well. And the rationale behind the deal was to expand the tracer diagnostics footprint in the Middle East. What does the opportunity set look like going forward and in 2026?
  Response: ResMetrix broadened NCS's Middle East presence (Emirates, Kuwait) via long-term contracts and expands capabilities and contract opportunities beyond that region.

• Question from Colby Sasso (Daniel Energy Partners): Then, just as a second follow-up question, free cash flow has been up handily year-over-year. And if we assume flattish growth in '26, would you expect similar free cash flow next year? And what does that profile look like?
  Response: In a flat environment NCS expects to convert roughly 50%–60% of adjusted EBITDA to free cash flow (~60% this year), measured after distributions to noncontrolling interest.

• Question from David Joseph Storms (Stonegate Capital Markets, Inc., Research Division): Just wanted to circle back to ResMetris here for a minute. It was mentioned that maybe the integration is a little ahead of schedule. Could you spend a little more time talking about how much time is left to fully integrate? And maybe if you think it was mentioned last quarter, the $1 million to $2 million in synergies could be implied if you think that's still a potential?
  Response: Integration is proceeding to plan with full alignment expected by early next year; synergy potential remains and management estimates ~5 percentage points across the $25M–$30M tracer revenue base, implying roughly $1.5M of synergies at the midpoint, mostly cost-of-sales.

• Question from David Joseph Storms (Stonegate Capital Markets, Inc., Research Division): Then I wanted to ask a follow-up question about the North Sea. I know it tends to be more project by project. Do you have any updates on maybe what that pipeline looks like going into 2026? And then additionally, you mentioned some new products like the Science La that you're going to be putting, maybe, into the Gulf of America as a test. Will those new products give you any advantage in the North Sea as well?
  Response: NCS has orders in hand for North Sea slotting sleeves for next year and expects similar activity in 2026; the Ratek PropX deepwater sleeve will debut in the Gulf of America but has applicability to deepwater North Sea over the medium to long term, acknowledging long sales cycles.

• Question from Gowshihan Sriharan (Singular Research, LLC): Given the weakness in the Canadian rigs, are you seeing any changes in customer strategies that would alter your margin math for next year? Or if you could give us some color on what kind of levers you'll be pulling to defend those margins.
  Response: So far customer budgets show roughly flat CapEx; NCS expects to continue taking share in Canada but will adapt cost structure if activity or budgets meaningfully decline.

• Question from Gowshihan Sriharan (Singular Research, LLC): And in this quarter, was the pressure mainly volume-driven? Or was there some component of price? Do you expect any pressure on that end as you try to gain market share?
  Response: The pressure this quarter was primarily volume-driven; pricing pressure exists but NCS competes on demonstrated customer value rather than lowering price.

• Question from Gowshihan Sriharan (Singular Research, LLC): And on the tracer diagnostics and ResMetrics contribution, I think you've indicated that most of it is predominantly lumpy, but there is a recurring revenue base that is growing. As we look towards these international markets, can you give us some color on the competitive space that is and how much upside there is to the recurring revenue base?
  Response: Tracer diagnostics remains largely project-by-project with some multiyear frameworks from ResMetrix; while not classic backlog-recurring revenue, management expects international recurrence via customer relationships and growing recurring-like demand.

• Question from Gowshihan Sriharan (Singular Research, LLC): In the competitive environment in these markets, what does that look like?
  Response: Competition varies by market—Middle East (notably Saudi) is most competitive due to NOCs; tracer diagnostics has few global competitors and is relatively well-behaved compared with other product lines.

Contradiction Point 1

ResMetrix Integration and Synergies

It involves the timeline and expected synergies from the ResMetrix acquisition, which are crucial for understanding NCS's operational and financial performance.

How much time remains to fully integrate ResMetrix? Is the $1M–$2M in synergies still achievable? - David Joseph Storms

2025Q3: Full integration is expected by early next year, with current synergies tracking ahead of schedule. Estimated savings are $1.5 million from a $25 million to $30 million combined revenue base, mainly on cost of sales. - Ryan Hummer(CEO)

What opportunities are there to improve margins from the ResMetrics acquisition over the next few years? - Joshua W. Jayne

2025Q2: The integration of ResMetrics is going well. We're actively implementing synergies. We're close to bringing some of those in by the end of the year. - Ryan Hummer(CEO)

Contradiction Point 2

North Sea Market Opportunities

It relates to the company's strategic focus and market outlook in the North Sea, which is relevant for understanding growth prospects and competitive positioning.

What is the pipeline for the North Sea for 2026, and will new products like Science La provide any advantages there? - David Joseph Storms

2025Q3: We believe it's one of the largest mudlogging and completion chemical providers in the Western Hemisphere. And so we're seeing some real great traction there. And we're excited about bringing our products and services to the region. - Ryan Hummer(CEO)

What are the cross-selling opportunities from the ResMetrics acquisition and potential new geographies for NCS? - David Joseph Storms

2025Q2: Our North Sea operations have been performing well, and we're actively pursuing additional projects. We have a very strong pipeline for the remainder of this year and into next year. - Michael L. Morrison(CFO)

Contradiction Point 3

M&A Opportunities and Market Disruptions

It involves the company's approach to potential M&A opportunities during market disruptions, impacting financial strategy and growth expectations.

How much time remains to fully integrate ResMetrix? And whether the $1 million to $2 million in synergies remain achievable? - David Joseph Storms (Stonegate Capital Markets, Inc., Research Division)

2025Q3: We'll certainly be active in evaluating the M&A market. And I think one of the things that at least we've experienced in the past is when you have changes in the market environment and market opportunity, it takes a little bit of time for seller price expectations to adjust. So certainly we'll engage in discussions and think about deploying cash through M&A where, where it makes sense. - Ryan Hummer(CEO)

Given your strong balance sheet, which is improving, will you pursue tactical M&A during market disruptions or maintain a conservative approach, hoarding cash to wait out the situation? - John Daniel (Daniel Energy Partners)

2025Q1: We'll certainly be active in evaluating the M&A market. And I think one of the things that at least we've experienced in the past is when you have changes in the market environment and market opportunity, it takes a little bit of time for seller price expectations to adjust. So certainly we'll engage in discussions and think about deploying cash through M&A where, where it makes sense. - Ryan Hummer(CEO)

Contradiction Point 4

Market Activity and Customer Behavior

It involves the company's expectations regarding customer behavior and market activity during periods of macroeconomic uncertainty, impacting sales and revenue forecasts.

Given the weakness in Canadian rigs, are customer strategies changing in a way that could impact next year's margins? What actions will you take to protect those margins? - Gowshihan Sriharan (Singular Research, LLC)

2025Q3: We have seen over the course of the last, even just the last week or so, oil prices in particular start to come down a bit. Look, it's early, but we are anticipating that there will be decisions made here in the course of the next couple weeks that will pull some activity out of the market, especially if WTI hangs in there with a five handle. Again, I think that that starts to come into the market first through private operators and maybe some of the smaller publics. - Ryan Hummer(CEO)

How is the sales pipeline activity evolving? Are you observing increased inbound calls as customers proactively address macro uncertainty, or is engagement slowing as buyers wait for market clarity? - Dave Storms (Stonegate Capital Partners Inc.)

2025Q1: Obviously, I think there's a lot of scenario planning that's going on in real time within our customer base. We have seen over the course of the last, even just the last week or so, oil prices in particular start to come down a bit. Look, it's early, but we are anticipating that there will be decisions made here in the course of the next couple weeks that will pull some activity out of the market, especially if WTI hangs in there with a five handle. Again, I think that that starts to come into the market first through private operators and maybe some of the smaller publics. - Ryan Hummer(CEO)

Contradiction Point 5

Volume and Pricing Pressures

It involves the nature and extent of pricing and volume pressures, which are critical for revenue forecasting and strategic decision-making.

Was the pressure primarily volume-driven? Will gaining market share create additional pressure? - Gowshihan Sriharan (Singular Research, LLC

2025Q3: Pressure is primarily volume-driven, with some pricing pressure. - Ryan Hummer(CEO)

Why did the consolidated margin expand year-over-year? - Dave Storms (Stonegate)

2024Q4: Pricing increase of around 5%. - Ryan Hummer(CEO)