Overview of Financial Performance

NCS Multistage Holdings, Inc. is a leading provider of products and services for the oil and gas industry. The company’s financial results for the first quarter of 2025 show strong revenue growth and improved profitability compared to the same period in 2024.

Total revenues for the first quarter of 2025 were $50.0 million, up 14.0% from $43.9 million in the first quarter of 2024. This increase was driven by higher product sales, especially in Canada, as well as growth in service revenues across all geographic regions. Product sales made up 70% of total revenues, while services accounted for the remaining 30%.

Gross profit increased by 24.7% to $21.1 million, with the gross margin expanding from 38.7% to 42.3%. This improvement was due to a favorable shift in the sales mix towards higher-margin international work and increased efficiencies in NCS’s manufacturing and supply chain operations.

Selling, general and administrative (SG&A) expenses rose by 17.1% to $16.2 million, primarily due to higher incentive compensation accruals, professional fees, and share-based compensation expenses. Despite this increase, NCS was able to leverage its fixed costs, leading to a 71.5% increase in operating income to $4.3 million.

Net income attributable to NCS Multistage Holdings, Inc. was $4.1 million, up 95.9% from $2.1 million in the first quarter of 2024. The company’s effective tax rate declined from 16.0% to 13.1%, further contributing to the bottom-line improvement.

Revenue and Profit Trends

The first quarter of 2025 saw a continuation of the positive trends that emerged in the latter half of 2024. Oil and natural gas prices, while still volatile, have generally improved compared to the prior year, supporting increased drilling and completion activity in North America.

In Canada, NCS experienced a robust increase in both product sales (18.4%) and service revenues (20.9%), reflecting strong demand for the company’s fracturing systems and related services. This offset a decline in U.S. product sales, which the company attributed to certain project delays.

Internationally, NCS saw a 33.8% jump in revenues, driven by growth in the Middle East tracer diagnostics business and increased North Sea fracturing systems sales and services. These higher-margin international projects helped improve the company’s overall profitability.

The shift in the sales mix, with a greater proportion of Canadian and international work, allowed NCS to leverage its fixed costs and improve its gross margin. The company also benefited from supply chain efficiencies and lean manufacturing initiatives implemented over the past year.

While SG&A expenses increased, NCS was able to maintain strong operating leverage, with operating income growing at a faster pace than revenues. This, combined with a lower effective tax rate, resulted in a significant increase in net income attributable to the company.

Strengths and Weaknesses

One of NCS’s key strengths is its diversified product and service offerings, which span fracturing systems, well construction, and tracer diagnostics. This diversification helps the company weather fluctuations in any one segment of the oil and gas industry.

The company’s strong presence in the Canadian market, which accounted for 75% of revenues in the first quarter of 2025, is another important strength. Canada has historically been a stable and growing market for NCS, and the company’s established relationships and local manufacturing capabilities provide a competitive advantage.

NCS’s focus on improving operational efficiency through supply chain optimization and lean manufacturing has also been a significant contributor to its improved profitability. The company’s ability to leverage its fixed costs and pass on cost increases to customers has helped offset the impact of inflationary pressures and tariffs.

However, NCS’s reliance on the North American market, particularly Canada and the United States, exposes the company to regional market conditions and regulatory changes. The company’s international expansion efforts, while showing progress, still account for a relatively small portion of its overall business.

Another potential weakness is the company’s exposure to commodity price volatility and its impact on customer spending. Sustained declines in oil and natural gas prices could lead to reduced drilling and completion activity, negatively affecting NCS’s revenues and profitability.

Outlook and Future Prospects

Looking ahead, NCS expects the positive trends observed in the first quarter of 2025 to continue, with a slight moderation in U.S. activity levels but stable performance in Canada. The company’s international expansion efforts, particularly in the Middle East and North Sea, are expected to drive further growth in higher-margin service revenues.

However, the company remains cautious about the potential impact of ongoing trade tensions and tariff policies, which could lead to additional cost pressures and disrupt supply chains. NCS is closely monitoring these developments and working to mitigate the risks through diversification of its supplier base and strategic pricing decisions.

To support its growth initiatives, NCS plans to invest approximately $1.5 million to $1.8 million in capital expenditures during 2025, focusing on upgrades to its manufacturing facilities, tracer diagnostics equipment, and field service capabilities. The company believes its strong liquidity position, with $23.0 million in cash and cash equivalents and an undrawn $26.8 million borrowing base under its asset-based revolving credit facility, will be sufficient to fund these investments and meet its other liquidity needs.

Overall, NCS Multistage Holdings, Inc. has demonstrated its ability to navigate the challenges of the oil and gas industry and deliver strong financial performance. The company’s diversified product and service offerings, operational efficiency initiatives, and international expansion efforts position it well for continued growth and profitability in the years ahead.