NCS Multistage Holdings, Inc.

Good day and thank you for standing by. Welcome to the second quarter of 2025 NCS Multi-Stage Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Mike Morrison, Chief Financial Officer, please go ahead.

And thank you for joining the NCS Multi-Stage Second Quarter 2025 Conference Call. Our call today will be led by our CEO, Ryan Hummer, and I will also provide comments. I want to remind listeners that some of today's comments include forward-looking statements such as our financial guidance and comments regarding our future expectations for financial results and business operations. These statements are subject to many risks and uncertainties that could cause our actual results to differ materially from any expectation expressed herein. Please refer to our most recent annual report on Form 10K and our latest SEC filings for risk factors and cautions regarding forward-looking statements. Our comments today, as well as the results of operations included in our earnings release, contain the following non-GAAP financial measures. Adjusted EBITDA, adjusted gross profit, adjusted gross margin, and free cash flow less distributions to non-controlling interest. These non-GAAP measures and reconciliations to the most comparable GAAP financial measures are provided in our Second Quarter earnings release, which can be found on our website, ncsmultistage.com. I will now turn the call over to Ryan.

Thank you, Mike, and welcome to our investors, analysts, and employees who are joining our Second Quarter 2025 earnings conference call. Mike will cover our quarterly financial results in more detail a bit later. I'll speak about a few highlights for the quarter and for the first half of 2025, and we'll also discuss the acquisition of ResMetrics, which we announced yesterday. NCS is off to a strong start in 2025. Building on solid first quarter results, our second quarter revenue of $36 million exceeded the high end of our guided range by more than $7 million, reflecting better than expected performance in each geography. Our performance in Canada was the highlight for us again this quarter. Our revenue for the first half of 2025 was over $86 million, which is 18% or nearly $13 million higher than the first half of 2024, anchored again by strong performance in Canada. Our adjusted EBITDA of $2.2 million for the second quarter of 2025 exceeded our guided range of negative $2 million to break even, and represented a -over-year improvement of $1.3 million. Our adjusted EBITDA of $10.4 million for the first half of 2025 represents an increase of $3.4 million, or 49%, compared to the first half of 2024. So to reiterate, NCS has had a strong first half of 2025. In prior earnings calls, I've referenced NCS's core strategies for creating value for our stakeholders. Slide 16 of our investor presentation helps to illustrate our strategy with examples of our progress. The first core strategy is to build upon our leading market positions. Our progress towards this goal continues to be reflected in our -to-date results in Canada. Our revenue in Canada for the first half of 2025 was $56 million, increasing 27% compared to the same period in 2004, far outpacing changes in the average Canadian land rate count. This favorable performance was most prevalent for our fracturing systems product line, as more operators in the Montney have adopted our single-point entry-frack technology and have experienced strong production results and increased operational flexibility. We've also increased sales of composite plugs in Canada, again, with customers in the Montney and the DuVernay Play. Many of our customers utilizing -and-perf completions will strategically plan ahead to work through spring breakup, which has partially mitigated the typical seasonality of our Canadian business. Our second core strategy is to capitalize on international and offshore opportunities. We're seeking to build on the success we achieved in 2024, a year in which international revenue reached 10% of total revenue, an important milestone for NCS. We expect continued success with customers in the North Sea, as our growing customer base and operational track record have positioned us for long-term growth in that market. We've had multiple successful North Sea operations this year, and we expect to be busy in the region for the foreseeable future. We expect to deliver or install sleeves or to perform service walk for wells with sleeves that are already installed for seven North Sea customers in 2025. That's an increase compared to five customers in 2024 and from only two customers in the region in 2022. In 2024, we signed a commercial purchase agreement with a customer in the Middle East, and we're encouraged by the pace of adoption of our well construction products and unconventional wells in the region. The increase in well construction sales has partially offset timing delays associated with tracer diagnostics projects in the region. As service companies await the award of tenders for completion services, including pressure pumping. We're also actively working with one of our Middle East regional partners to transition away from radioactive tracing to chemical tracing in the region. Third core strategy for NCS is to commercialize innovative solutions to complex customer challenges. We have internal objectives this year that are tied to field trials for new products and for successfully entering new markets and regions. I touched on several of these on the last call and will provide an update on a few notable items. So during the second quarter, we successfully ran our first seven inch sliding sleeve and service tool for a remedial cementing application. The customer was pleased with the results and has subsequently ordered additional tools. Repeat Precision has experienced strong uptake of its new offerings, particularly the StageSaver Composite Frac Plug in the United States and in Canada. The StageSaver is designed to de-risk certain issues that can arise during simulfrac, or I guess trimulfrac and other operations, which includes screenouts and perforating gun misfires. There's several other products and services for which we expect field trials to begin in the second half of the year. And I'm looking forward to discussing these products and services on future calls. I'll now spend a few minutes reviewing the strategic acquisition that we announced yesterday. I'm excited to announce the acquisition of ResMetrics and to welcome the ResMetrics team to NCS. ResMetrics is a provider of tracer diagnostics, technologies and services, and has built an excellent business that we believe is highly complimentary with our current tracer diagnostics product line. ResMetrics success has resulted from its -to-end scientific approach to enable more quantitative results from cost-effective tracer diagnostic studies. Through precise chemical manufacturing, tracer injection and sampling programs, and robust chemical portfolio performance testing, ResMetrics has built a growing and profitable business with trailing 12-month unaudited revenue through June 2025 of over $10 million, generating an EBITDA margin of over 30%. ResMetrics business complements our existing tracer diagnostics product line in many ways. From a product and service offering perspective, ResMetrics provides NCS with a liquid oil tracer offering, which we compare with our existing products to provide a combined offering of both liquid and particulate tracers for oil and for water, natural gas tracers, and radioactive tracer services. In addition, the ResMetrics team has additional expertise in designing and executing tracer diagnostics projects for enhanced oil recovery applications, such as water floods, and for high temperature applications, which we believe will be growing markets over time. Both NCS and ResMetrics have unique tracer portfolios, and in time we believe that our customers will be better served with a larger combined high-performance chemical tracer portfolio, which can enhance the value of tracer diagnostics projects. Although NCS and ResMetrics have historically competed -to-head for tracer work in the US, our customer bases have limited overlap, and we believe that each of our respective current customer bases will benefit from the broader service offering of the combined portfolio. In addition, with a combined larger customer base and geographic footprint, new service and product developments in this product line will be more scalable and impactful to NCS. Internationally, the addition of ResMetrics expands our presence in the Middle East into the UAE and Kuwait through strategic partnerships with service companies operating in the region. We've been very impressed with the team at ResMetrics while evaluating the transaction and planning the upcoming integration. The focus of this transaction is to create the leading global tracer diagnostics business and to establish a strong platform for product and service development around reservoir diagnostics. I'm confident that we can achieve this goal through the efforts of the NCS and ResMetrics combined team. We'll be methodical in our integration, keeping the voice of the customer in mind as we identify and implement the best practices from ResMetrics and NCS across all of the relevant workflows, many of which will take some time to validate in the laboratory. While the transaction is not predicated on cost synergies, we believe that in time we will benefit from the implementation of these best practices as we seek to optimize chemical usage, realize economies of scale, and better utilize the skill sets of our employees. In past calls, I've referred to our balance sheet as a strategic asset, and this transaction is a great example of that. Our strong balance sheet and capitalite business model generates free cash flow through industry cycles. We're utilizing cash on hand to fund this acquisition while maintaining a net cash balance and robust liquidity. Deploying cash on hand for the strategic acquisition of a growing and profitable business enables us to improve our return on capital, and we believe positions us to create additional value for our shareholders over time. As the North American E&P business matures and our customers consolidate to benefit from economies of scale, we believe that oil field services providers in the industry will need to do the same, engaging in strategic horizontal combinations like this one. At NCS, we believe that the capabilities of our people, our infrastructure, and the breadth of our product lines operating in strategic geographies, along with our strong balance sheet, positions us well to supplement our organic growth strategy with complementary transactions like the RAS metrics acquisition over time. Mike will now review our results for the second quarter and our guidance for the third quarter.