NCS Multistage Holdings, Inc.

Good day and thank you for standing by. Welcome to Quarter 1, 2021 NCS Multistage Earning Conference Call. At this time, all participants are in listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star and then the number 1 on your telephone keypad. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to transfer the conference over to your speaker, Mr. Ryan Hummer. Please go ahead.

Thank you, and thank you for joining the NCS Multistage first quarter 2001 conference call. Our call today will be led by our CEO, Robert Knipper, and I will also provide comments. We'd like to caution listeners that some of the statements made on this call could be forward-looking. And to the extent that our remarks today contain information other than historical information, please note that we are relying on federal safe harbor protections. Such forward-looking statements may include comments regarding our future expectations for financial results and business operations and are subject to known and unknown risks and uncertainties, including with respect to the COVID-19 pandemic and its impact on the global economy, oil demand, and our company. I would like to refer you to our press release issued last night, along with other public filings made from time to time with the SEC that outline those risks. In today's call, we refer to adjusted EBITDA, free cash flow, and net working capital, which are non-GAAP financial measures. We use these measures because they allow us to compare financial performance consistently over various periods without regard to costs associated with our current capital structure and in a manner that we believe better reflects our operating performance. Our press release and the updated investor presentation posted yesterday, both of which are available on our website, NCSMultistage.com, provide reconciliations of these non-GAAP financial measures to the most comparable GAAP financial measure. I will now turn the call over to Robert. Thanks, Ryan.

Welcome to our investors, analysts, and employees joining our first quarter 2021 earnings conference call. Our performance in the first quarter was largely in line with the guidance we provided in early March. I'll briefly discuss our results and outlook for each of the U.S., Canada, and international markets. Starting with the U.S., our revenue of $7.8 million in the first quarter slightly outperformed our guidance of $6.5 to $7.5 million as March revenues exceeded our expectations for both repeat precision and our fracturing systems product line. Volumes at repeat precision have increased from the lower levels seen early in the first quarter and the upgrades that we made to our plug design have provided the reliability that we and our customers have come to expect. With WTI pricing stabilizing at or above $60 a barrel, we've seen an increase in fracturing systems work in the U.S. as private operators have increased activity in the basins, where pinpoint completions using sliding sleeves have demonstrated our operational benefits for our customers. As a result, we expect that we will return to sequential revenue growth in the U.S. in the second quarter. Our Canadian revenue of $20.2 million in the first quarter was near the high end of our guidance of $19 to $20.5 million, despite weather-driven activity reductions from spring breakups starting about a week earlier than normal. I'm very pleased with the initial adoption of our terrace sleeve for water flood applications in Canada, as post-completion activity presents an exciting opportunity for NCS. We expect that our Canadian business will exhibit typical seasonality with a look period of low activity through May before recovering in June through the winter drilling season. This stands in stark contrast to last year when rig counts reached multi-decade lows and activity didn't rebound until August or September. We're encouraged by discussions with our customers about both the timing and scope of their expected activity after spring breakup, weather permitting. This is also reflected in the most recent survey by the Petroleum Services Association of Canada, which recently increased their expectation for the number of wells to be drilled in Canada in 2021 by 11% as compared to their initial expectation in January. International operations were very slow for us in the first quarter, as recovery has lagged North America, which is reflected in our international revenue of only a half a million dollars during the quarter. International activity has started to recover for us in the second quarter, and we believe that it will continue to increase as we move into the second half of the year. We continue to remain focused on managing our costs and have maintained discipline on SG&A and capital spending. Our SG&A for the first quarter of 2021 decreased by 39% as compared to the first quarter of 2020. Our net capital expenditures for the quarter were only $0.1 million, highlighting both the capital-like nature of our business and our financial discipline. We have also retained our strong balance sheet with approximately $6 million in net cash and an undrawn revolver as of March 31st. The borrowing base for our revolver at the end of March exceeded $14 million. Our entire team at NCS has done a tremendous job, and I'm proud to say that we've continued our track record of zero recordable incidents from 2020 into 2021, with no reportable incidents thus far this year. Now I'll ask Ryan to discuss our financial results in more detail.