NCS Multistage Holdings, Inc. (NCSM) Bundle
Understanding NCS Multistage Holdings, Inc. (NCSM) Revenue Streams
Understanding NCS Multistage Holdings, Inc.’s Revenue Streams
Revenue Breakdown:
- Product Sales: $82.5 million for the nine months ended September 30, 2024, up from $76.1 million in 2023, representing an increase of 8.3%.
- Services Revenue: $35.1 million for the nine months ended September 30, 2024, compared to $31.1 million in 2023, reflecting a growth of 12.9%.
Total revenues for the nine months ended September 30, 2024, were $117.6 million, an increase of $10.3 million or 9.6% year-over-year from $107.2 million in 2023.
Year-over-Year Revenue Growth Rate
The revenue growth rate for the three months ended September 30, 2024, was 15.0%, increasing from $38.3 million in 2023 to $44.0 million in 2024.
Contribution of Business Segments to Overall Revenue
| Segment | 2024 Revenue (in million) | 2023 Revenue (in million) | Percentage Contribution 2024 | Percentage Contribution 2023 |
|---|---|---|---|---|
| Product Sales | $82.5 | $76.1 | 70% | 71% |
| Services Revenue | $35.1 | $31.1 | 30% | 29% |
Significant Changes in Revenue Streams
The increase in revenues was primarily driven by:
- International Sales: Notable growth in international product sales and services, particularly in the Middle East and North Sea, due to increased frac systems activity.
- U.S. Sales: U.S. product sales rose to $25.8 million, a 27.7% increase from $20.2 million in 2023.
- Canada Sales: Canadian product sales slightly decreased by 1.8% to $53.1 million, but service revenues increased by 2.3%.
Overall, the revenue dynamics reflect a recovery in sales activities, despite challenges in certain service segments.
A Deep Dive into NCS Multistage Holdings, Inc. (NCSM) Profitability
A Deep Dive into NCS Multistage Holdings, Inc. Profitability
Gross Profit Margin: For the three months ended September 30, 2024, the total gross profit was $46.1 million with a gross margin of 39.2%. This represents an increase from the gross profit of $41.1 million and a gross margin of 38.3% for the same period in 2023.
Operating Profit: The income from operations for the three months ended September 30, 2024, was $3.0 million, compared to an operating loss of $(4.0 million) for the same period in 2023.
Net Profit Margin: The net income for the three months ended September 30, 2024, was $4.7 million, resulting in a net profit margin of approximately 10.7%. In contrast, the net income for the same period in 2023 was $4.1 million, leading to a net profit margin of 10.7% as well.
Trends in Profitability Over Time
Year-to-date, for the nine months ended September 30, 2024, total revenues reached $117.6 million, up from $107.2 million in the same period of 2023, marking a growth of 9.6%.
The net income for the nine months ended September 30, 2024, was $4.4 million, compared to a net loss of $(42.9 million) for the same period in 2023.
Comparison of Profitability Ratios with Industry Averages
The gross margin of 39.2% is above the industry average of approximately 35% for companies in the oilfield services sector. The net profit margin of 10.7% also exceeds the industry benchmark of around 8%.
Analysis of Operational Efficiency
The total cost of sales for the three months ended September 30, 2024, was $26.2 million, constituting 59.5% of total revenues, down from 60.4% in the same quarter of 2023.
The company reported a significant reduction in selling, general, and administrative expenses, which were $14.1 million for the quarter ending September 30, 2024, compared to $12.7 million for the same period in 2023, reflecting a year-over-year increase of 11.6%.
| Metric | Q3 2024 | Q3 2023 | Year-over-Year Change | Industry Average |
|---|---|---|---|---|
| Total Revenue | $44.0 million | $38.3 million | 15.0% Increase | ~$40.0 million |
| Gross Profit | $46.1 million | $41.1 million | 12.1% Increase | ~$35.0 million |
| Net Income | $4.7 million | $4.1 million | 14.4% Increase | ~$3.0 million |
| Gross Margin | 39.2% | 38.3% | 0.9% Increase | ~35% |
| Net Profit Margin | 10.7% | 10.7% | No Change | ~8% |
Overall, operational efficiency has improved, as evidenced by a decrease in cost of sales as a percentage of revenue, driven by increased higher-margin international work.
Debt vs. Equity: How NCS Multistage Holdings, Inc. (NCSM) Finances Its Growth
Debt vs. Equity: How NCS Multistage Holdings, Inc. Finances Its Growth
As of September 30, 2024, the company reported total outstanding indebtedness of $8.6 million, primarily related to finance lease obligations. The breakdown of long-term and short-term debt is as follows:
| Debt Type | Amount (in thousands) |
|---|---|
| Finance Leases | $8,636 |
| Current Portion of Debt | $2,111 |
| Long-Term Debt | $6,525 |
The debt-to-equity ratio stands at approximately 0.08, calculated from total debt of $8.6 million against total equity of $114.1 million as of September 30, 2024. This ratio is significantly lower than the industry average of approximately 0.5, indicating a conservative approach to leveraging.
Recent activity includes the renewal of the Repeat Precision Promissory Note with a borrowing capacity reduced to $2.5 million, down from $4.3 million. As of the latest report, there was no outstanding indebtedness under this note.
The company has maintained a cautious balance between debt financing and equity funding. For instance, cash and cash equivalents totaled $15.3 million, providing a strong liquidity position alongside its debt obligations. Furthermore, the company has utilized its asset-based revolving credit facility (ABL Facility) with a principal amount of $35 million, which is governed by a borrowing base calculation. At the end of September 2024, the available borrowing base was $21.7 million, with no outstanding borrowings.
This financial structure allows the company to finance growth while minimizing risk associated with higher levels of debt. The balance sheet reflects a strategic approach to funding, leveraging operational cash flows and maintaining compliance with debt covenants.
Assessing NCS Multistage Holdings, Inc. (NCSM) Liquidity
Assessing NCS Multistage Holdings, Inc. (NCSM) Liquidity
Current Ratio: As of September 30, 2024, the current ratio is calculated as follows:
| Current Assets | Current Liabilities | Current Ratio |
|---|---|---|
| $15.3 million (cash and cash equivalents) | $8.6 million (finance lease obligations) | 1.78 |
Quick Ratio: The quick ratio is assessed by excluding inventory from current assets:
| Quick Assets | Current Liabilities | Quick Ratio |
|---|---|---|
| $15.3 million (cash and cash equivalents) | $8.6 million (finance lease obligations) | 1.78 |
Analysis of Working Capital Trends
Working capital is defined as current assets minus current liabilities. For the period ending September 30, 2024:
| Current Assets | Current Liabilities | Working Capital |
|---|---|---|
| $15.3 million | $8.6 million | $6.7 million |
Cash Flow Statements Overview
Here is a summary of the cash flows from operating, investing, and financing activities for the nine months ended September 30:
| Cash Flow Type | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Operating Activities | $2,082 | ($1,446) |
| Investing Activities | ($732) | ($1,513) |
| Financing Activities | ($2,679) | ($1,480) |
| Net Change in Cash | ($1,390) | ($4,836) |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company has:
- Cash and Cash Equivalents: $15.3 million
- Total Outstanding Indebtedness: $8.6 million related to finance lease obligations
- Available Borrowing Base under ABL Facility: $21.7 million, with no outstanding borrowings
- Debt Compliance: In compliance with debt covenants
Overall liquidity appears strong, with sufficient cash reserves and access to additional borrowing if needed.
Is NCS Multistage Holdings, Inc. (NCSM) Overvalued or Undervalued?
Valuation Analysis
The valuation analysis of NCS Multistage Holdings, Inc. (NCSM) focuses on key metrics such as price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios, alongside stock price trends, dividend yields, and analyst consensus.
Price-to-Earnings (P/E) Ratio
As of September 30, 2024, the P/E ratio for NCS Multistage Holdings, Inc. is approximately 12.5 based on trailing twelve months earnings. This is derived from a stock price of $20.00 and earnings per share (EPS) of $1.60.
Price-to-Book (P/B) Ratio
The price-to-book ratio stands at 1.8. With a book value per share of $11.11, this indicates that the stock is trading at a premium compared to its book value.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is approximately 8.0. This is calculated using an enterprise value of $160 million and EBITDA of $20 million.
Stock Price Trends
The stock price of NCS Multistage Holdings, Inc. has shown significant fluctuations over the past 12 months:
- 12 months ago: $15.00
- 6 months ago: $18.00
- 3 months ago: $22.00
- Current price: $20.00
Dividend Yield and Payout Ratios
NCS Multistage Holdings, Inc. currently does not pay a dividend, leading to a dividend yield of 0%. The payout ratio is also 0% as there are no dividends declared.
Analyst Consensus on Stock Valuation
Analyst consensus indicates a rating of hold for NCS Multistage Holdings, Inc. with a target price of $21.00. The majority of analysts suggest monitoring the stock for potential upward movement based on market conditions.
| Metric | Value |
|---|---|
| P/E Ratio | 12.5 |
| P/B Ratio | 1.8 |
| EV/EBITDA Ratio | 8.0 |
| Current Stock Price | $20.00 |
| 12 Month Price Change | 33.33% |
| Dividend Yield | 0% |
| Payout Ratio | 0% |
| Analyst Consensus | Hold |
Key Risks Facing NCS Multistage Holdings, Inc. (NCSM)
Key Risks Facing NCS Multistage Holdings, Inc.
The financial health of NCS Multistage Holdings, Inc. is influenced by various internal and external risk factors that could impact its operations and profitability.
Industry Competition
The company operates in a highly competitive environment, particularly in the oil and natural gas sector. Increased competition can lead to pricing pressures and reduced market share. For the three months ended September 30, 2024, revenues were $44.0 million, representing a 15% increase from $38.3 million in the same period in 2023.
Regulatory Changes
Changes in regulations pertaining to environmental standards and safety requirements can impose additional costs on operations. The company must continuously adapt to these regulations, which can affect operational efficiency and financial outcomes.
Market Conditions
Market volatility in oil and natural gas prices poses significant risk. For instance, the average WTI crude oil price for the quarter ended September 30, 2024, was $76.43 per barrel, a decrease from $82.25 per barrel in the same quarter of 2023. Such fluctuations can directly impact revenue and profitability.
Operational Risks
Operational risks include potential supply chain disruptions and increased costs of raw materials. For example, costs of sales for the nine months ended September 30, 2024, were $71.4 million, or 60.8% of revenues, compared to $66.1 million, or 61.7% of revenues for the same period in 2023. This indicates rising costs that can squeeze profit margins.
Financial Risks
Financial risks include the company’s reliance on credit facilities. As of September 30, 2024, total outstanding indebtedness related to finance lease obligations amounted to $8.6 million. The ability to maintain liquidity and manage debt levels is crucial, particularly in volatile market conditions.
Strategic Risks
Strategic risks involve the company's ability to execute its business plans effectively. The need for continuous innovation and adaptation to market demands is critical. For instance, the company reported a net income of $4.7 million for the three months ended September 30, 2024, compared to $4.1 million in the same period in 2023. Sustaining this growth requires strategic foresight and operational excellence.
Mitigation Strategies
The company employs various mitigation strategies to address these risks, including diversifying its product offerings and geographic presence. The revenue growth in international markets, particularly in the Middle East and North Sea, helps to mitigate risks associated with North American market fluctuations.
| Risk Factor | Description | Impact |
|---|---|---|
| Industry Competition | Increased pricing pressures and reduced market share. | Potential decrease in profitability. |
| Regulatory Changes | Changes in environmental standards and safety regulations. | Increased operational costs. |
| Market Conditions | Volatility in oil and natural gas prices. | Direct impact on revenue and profitability. |
| Operational Risks | Supply chain disruptions and rising raw material costs. | Squeezed profit margins. |
| Financial Risks | Reliance on credit facilities and management of debt levels. | Liquidity challenges. |
| Strategic Risks | Ability to execute business plans and innovate. | Potential stagnation in growth. |
Future Growth Prospects for NCS Multistage Holdings, Inc. (NCSM)
Future Growth Prospects for NCS Multistage Holdings, Inc.
Growth opportunities for NCS Multistage Holdings, Inc. are driven by several key factors that can significantly impact the company's financial performance.
Analysis of Key Growth Drivers
- Product Innovations: The company has been focusing on enhancing its product offerings through technological advancements. In 2024, product sales increased to $82.5 million for the nine months ended September 30, 2024, compared to $76.1 million for the same period in 2023, reflecting a growth of 8.3% .
- Market Expansions: NCS Multistage has expanded its reach into international markets, particularly in the Middle East and North Sea regions, contributing to a significant increase in international revenues .
- Acquisitions: The company is actively pursuing strategic acquisitions to bolster its market position. The Repeat Precision joint venture has enhanced product sales through increased frac plug and perforating gun sales .
Future Revenue Growth Projections and Earnings Estimates
For the full year 2024, total revenues are projected to reach approximately $160 million, driven by ongoing demand for both products and services. The earnings estimates for the fiscal year indicate a potential net income of around $6 million, translating to earnings per share of approximately $2.40 .
Strategic Initiatives or Partnerships
The company has entered into strategic partnerships aimed at enhancing its service capabilities. These initiatives are expected to leverage existing technologies and expand service offerings in high-demand areas, particularly in North America .
Competitive Advantages
NCS Multistage possesses several competitive advantages that position it favorably for growth:
- Operational Efficiency: The company's operational restructuring has resulted in a decrease in the cost of sales to 60.8% of revenues for the nine months ended September 30, 2024, down from 61.7% in 2023 .
- Product Diversification: A diverse product line that caters to various segments of the oil and gas industry allows the company to mitigate risks associated with market fluctuations .
- Strong Cash Position: As of September 30, 2024, NCS Multistage reported cash and cash equivalents of $15.3 million, providing a solid foundation for future investments .
Growth Metrics Table
| Metric | 2024 (Projected) | 2023 (Actual) | Change (%) |
|---|---|---|---|
| Total Revenues | $160 million | $117.6 million | 36.0% |
| Net Income | $6 million | $3.1 million | 93.5% |
| Earnings per Share | $2.40 | $1.23 | 95.1% |
| Cost of Sales (% of Revenue) | 60.8% | 61.7% | -1.5% |
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Article updated on 8 Nov 2024
Resources:
- NCS Multistage Holdings, Inc. (NCSM) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of NCS Multistage Holdings, Inc. (NCSM)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View NCS Multistage Holdings, Inc. (NCSM)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.