NCS Multistage Holdings, Inc. (NASDAQ: NCSM) (the “Company,” “NCS,”
“we” or “us”), a leading provider of highly engineered products and
support services that facilitate the optimization of oil and
natural gas well completions and field development strategies,
today announced its results for the quarter ended March 31,
2021.
Financial Review
Total revenues were $28.5 million for the quarter ended
March 31, 2021, which was a decrease of 48% compared to the
first quarter of 2020. This decrease reflected reductions in
product sales and services volumes in all geographic areas as
well as lower pricing for certain products and services, including
composite plugs and tracer diagnostics. We believe the decrease in
both activity and pricing resulted from the decline in market
conditions primarily related to the Coronavirus disease 2019
(“COVID-19”) pandemic, which had a negative impact on our revenues
during the three months ended March 31, 2021 as drilling rig and
completion activity was substantially lower in the first quarter of
2021 as compared to 2020, particularly in North America. Total
revenues increased by 4% as compared to the fourth
quarter of 2020 with an increase of 45% in Canada partially
offset by decreases of 31% in the United States and 79% in
international markets.
Gross profit, which we define as total revenues less total cost
of sales exclusive of depreciation and amortization, was $10.2
million, or 36% of total revenues, in the first quarter of 2021,
compared to $23.9 million, or 44% of total revenues, in the first
quarter of 2020. Cost of sales as a percentage of total revenues
increased due to the significant reduction in revenue, leading to
under-utilization of manufacturing capacity and field service
personnel, even after the reduction of our capacity and staff, as
well as a reduction in pricing for certain products and services.
Cost of sales in the first quarter of 2021 was also impacted by
higher scrap expense and inventory reserves at Repeat Precision
related to product design changes implemented during the quarter.
We believe that our cost of sales as a percentage of revenue was
negatively impacted by a decline in oil and gas market activity
levels primarily related to the COVID-19 pandemic.
Selling, general and administrative (“SG&A”) expenses
totaled $12.8 million in the first quarter of 2021, a decrease of
$8.1 million as compared to the first quarter of the prior year.
This overall decrease in expense reflects reductions in
compensation and benefits, severance charges, professional fees,
share-based compensation, bad debt expense and travel and
entertainment expenses.
Net loss was $(3.4) million, or $(1.43) per diluted share, for
the quarter ended March 31, 2021, which included a net impact
of $0.2 million (after tax effect of $(0.6) million, or
$(0.25) per diluted share) related to foreign currency exchange
gain and income tax valuation allowances recorded to reduce the
carrying value of deferred tax assets. Adjusted net loss, which
excludes these items, was $(2.8) million, or $(1.18) per diluted
share, for the quarter ended March 31, 2021. This compares to
a net loss of $(51.5) million, or $(21.92) per diluted share,
in the first quarter of 2020, which included a net impact of
$(50.2) million (after tax effect of $(51.0) million, or $(21.70)
per diluted share) related to impairment charges and foreign
currency exchange loss as well as the tax impact of the Coronavirus
Aid, Relief, and Economic Security Act (the “CARES Act”) and income
tax valuation allowances recorded to reduce the carrying value of
our U.S. and Canadian deferred tax assets. Adjusted net loss, which
excludes these items, was $(0.5) million, or $(0.22) per diluted
share, for the quarter ended March 31, 2020.
Adjusted EBITDA was $0.1 million for the quarter ended
March 31, 2021, a decrease of $9.2 million as compared to the
first quarter of 2020.
Capital Expenditures and Liquidity
The Company incurred capital expenditures of $0.1 million, net,
during the first quarter of 2021 as compared to $0.4 million, net,
for the first quarter of 2020.
As of March 31, 2021, the Company had $12.0 million in cash
and $5.7 million in total debt, with our senior secured credit
facility remaining undrawn. The borrowing base under the senior
secured credit facility as of March 31, 2021 was $14.4
million. The Company’s net working capital, which we define as our
current assets, excluding cash and cash equivalents, minus our
current liabilities, excluding current maturities of long-term
debt, was $55.5 million at March 31, 2021.
Review and Outlook
NCS’s Chief Executive Officer, Robert Nipper commented, “The
strong performance of our Canadian operations allowed NCS to grow
total revenue for the quarter by 4% as compared to the fourth
quarter of 2020, despite lower seasonal activity in international
markets and challenges faced in the U.S. related to winter storm
Uri and at our Repeat Precision joint venture early in the
quarter.
We are maintaining our cost and capital discipline, having
reduced our SG&A expenses by 39% in the first quarter of 2021
as compared to the first quarter of 2020 and limiting net capital
expenditures to $0.1 million during the quarter, highlighting the
capital-light nature of our business.
Our strong balance sheet is demonstrated by our net cash
position of $6.3 million at the end of the first quarter. In
addition, our credit facility remains undrawn with a borrowing base
of over $14 million at March 31, 2021.
We are encouraged by the recent performance of our U.S.
business, including Repeat Precision, which exited the first
quarter with increasing activity in March as compared to the prior
month, which we expect to continue into the second quarter,
allowing our U.S. operations to return to sequential revenue
growth. We expect to experience a meaningful sequential decline in
our Canadian revenue in the second quarter, associated with typical
seasonal patterns related to spring break-up, however, we expect
activity in Canada in the second quarter of 2021 to exceed activity
from the second quarter of 2020, which was at multi-decade low
levels. The international rig count appears to have bottomed during
the first quarter of 2021, and we expect our activity in
international markets to increase sequentially in the second
quarter.
I am proud to say that we have continued our excellent
operational performance from 2020 into 2021. We had zero total
recordable incidents in 2020 and have had zero thus far in 2021.
This accomplishment speaks to the quality of our people and
processes.
I want to thank the entire team at NCS and Repeat Precision. It
is through their hard work and determination that we can deliver on
our commitments to provide value to customers, to drive innovation
in the industry, and to create value for our shareholders.”
Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBITDA Less
Share-Based Compensation, Adjusted Net (Loss) Income, Adjusted Net
(Loss) Earnings per Diluted Share, Free Cash Flow, Free Cash Flow
Less Distributions to Non-Controlling Interest and net working
capital are non-GAAP financial measures. For an explanation of
these measures and a reconciliation, refer to “Non-GAAP Financial
Measures” below.
Conference Call
The Company will host a conference call to discuss its first
quarter 2021 results and future financial expectations on Tuesday,
May 4, 2021 at 7:30 a.m. Central Time
(8:30 a.m. Eastern Time). To join the conference call from
within the United States, participants may dial (844) 400-1696. To
join the conference call from outside of the United States,
participants may dial (703) 736-7385. The conference access
code is 4598373. Participants are encouraged to log in to the
webcast or dial in to the conference call approximately ten minutes
prior to the start time. To listen via live webcast, please visit
the Investors section of the Company’s website,
www.ncsmultistage.com.
An audio replay of the conference call will be available shortly
after the conclusion of the call and will remain available for
approximately seven days. It can be accessed by dialing (855)
859-2056 within the United States or (404) 537-3406 outside of the
United States. The conference call replay access code is 4598373.
The replay will also be available in the Investors section of the
Company’s website shortly after the conclusion of the call and will
remain available for approximately seven days.
About NCS Multistage Holdings, Inc.
NCS Multistage Holdings, Inc. is a leading provider of highly
engineered products and support services that facilitate the
optimization of oil and natural gas well completions and field
development strategies. NCS provides products and services to
exploration and production companies for use in horizontal wells in
unconventional oil and natural gas formations throughout North
America and in selected international markets, including Argentina,
China, the Middle East and the North Sea. NCS’s common stock is
traded on the NASDAQ Capital Market under the symbol “NCSM.”
Additional information is available on the website,
www.ncsmultistage.com.
Forward Looking Statements
This press release contains forward-looking statements within
the meaning of the “safe harbor” provisions of the Private
Securities Litigation Reform Act of 1995. Forward-looking
statements can be identified by words such as “anticipates,”
“intends,” “plans,” “seeks,” “believes,” “estimates,” “expects” and
similar references to future periods, or by the inclusion of
forecasts or projections. Examples of forward-looking statements
include, but are not limited to, statements we make regarding the
outlook for our future business and financial performance.
Forward-looking statements are based on our current expectations
and assumptions regarding our business, the economy and other
future conditions. Because forward-looking statements relate to the
future, by their nature, they are subject to inherent
uncertainties, risks and changes in circumstances that are
difficult to predict. As a result, our actual results may differ
materially from those contemplated by the forward-looking
statements. Important factors that could cause our actual results
to differ materially from those in the forward-looking statements
include regional, national or global political, economic, business,
competitive, market and regulatory conditions and the following:
the risks and uncertainties relating to public health crises,
including the COVID-19 pandemic and its continuing impact on market
conditions and our business, financial condition, results of
operations, cash flows and stock price; declines in the level of
oil and natural gas exploration and production activity within
Canada and the United States; oil and natural gas price
fluctuations; the financial health of our customers including their
ability to pay for products or services provided; inability to
successfully implement our strategy of increasing sales of products
and services into the United States; significant competition for
our products and services that results in pricing pressures,
reduced sales, or reduced market share; loss of significant
customers; our inability to successfully develop and implement new
technologies, products and services; our inability to protect and
maintain critical intellectual property assets; losses and
liabilities from uninsured or underinsured business activities; our
failure to identify and consummate potential acquisitions; our
inability to integrate or realize the expected benefits from
acquisitions; currency exchange rate fluctuations; impact of severe
weather conditions; risks resulting from the operations of a joint
venture arrangement; restrictions on the availability of our
customers to obtain water essential to the drilling and hydraulic
fracturing processes; changes in legislation or regulation
governing the oil and natural gas industry, including restrictions
on emissions of greenhouse gases; our inability to meet regulatory
requirements for use of certain chemicals by our tracer diagnostics
business; change in trade policy, including the impact of
additional tariffs; our inability to accurately predict customer
demand, which may result in us holding excess or obsolete
inventory; failure to comply with or changes to federal, state and
local and non-U.S. laws and other regulations, including
anti-corruption and environmental regulations, the CARES Act and
the U.S. Tax Cuts and Jobs Act of 2017; loss of our information and
computer systems; system interruptions or failures, including
complications with our enterprise resource planning system,
cyber-security breaches, identity theft or other disruptions that
could compromise our information; impairment in the carrying value
of long-lived assets and goodwill; our failure to establish and
maintain effective internal control over financial reporting; our
success in attracting and retaining qualified employees and key
personnel; risks and uncertainties relating to cost reduction
efforts or savings we may realize from such cost reduction efforts;
the reduction in our senior secured credit facility borrowing base
or our inability to comply with the covenants in our debt
agreements; and our inability to obtain sufficient liquidity on
reasonable terms, or at all and other factors discussed or
referenced in our filings made from time to time with the
Securities and Exchange Commission. Any forward-looking statement
made by us in this press release speaks only as of the date on
which we make it. Factors or events that could cause our actual
results to differ may emerge from time to time, and it is not
possible for us to predict all of them. We undertake no obligation
to publicly update or revise any forward-looking statement, whether
as a result of new information, future developments or otherwise,
except as may be required by law.
Contact
Ryan HummerChief Financial Officer(281)
453-2222IR@ncsmultistage.com
NCS MULTISTAGE HOLDINGS,
INC.CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(In thousands, except per share
data)(Unaudited)
|
|
Three Months Ended |
|
|
March 31, |
|
|
2021 |
|
|
2020 |
|
Revenues |
|
|
|
|
|
|
Product sales |
|
$ |
20,174 |
|
|
$ |
39,430 |
|
Services |
|
|
8,340 |
|
|
|
15,120 |
|
Total revenues |
|
|
28,514 |
|
|
|
54,550 |
|
Cost of
sales |
|
|
|
|
|
|
Cost of product sales,
exclusive of depreciation and amortization
expense shown below |
|
|
13,921 |
|
|
|
23,448 |
|
Cost of services, exclusive of
depreciation and amortization expense shown
below |
|
|
4,357 |
|
|
|
7,166 |
|
Total cost of sales, exclusive of depreciation
and amortization expense shown below |
|
|
18,278 |
|
|
|
30,614 |
|
Selling, general and
administrative expenses |
|
|
12,784 |
|
|
|
20,835 |
|
Depreciation |
|
|
937 |
|
|
|
1,452 |
|
Amortization |
|
|
167 |
|
|
|
1,133 |
|
Impairment |
|
|
— |
|
|
|
50,194 |
|
Loss from operations |
|
|
(3,652 |
) |
|
|
(49,678 |
) |
Other income
(expense) |
|
|
|
|
|
|
Interest expense, net |
|
|
(168 |
) |
|
|
(322 |
) |
Other income, net |
|
|
341 |
|
|
|
158 |
|
Foreign currency exchange
gain, net |
|
|
150 |
|
|
|
10 |
|
Total other income (expense) |
|
|
323 |
|
|
|
(154 |
) |
Loss before income tax |
|
|
(3,329 |
) |
|
|
(49,832 |
) |
Income tax expense (benefit) |
|
|
128 |
|
|
|
(925 |
) |
Net loss |
|
|
(3,457 |
) |
|
|
(48,907 |
) |
Net (loss) income attributable
to non-controlling interest |
|
|
(60 |
) |
|
|
2,642 |
|
Net loss attributable
to NCS Multistage
Holdings, Inc. |
|
$ |
(3,397 |
) |
|
$ |
(51,549 |
) |
Loss per common
share |
|
|
|
|
|
|
Basic loss per common share attributable to
NCS Multistage Holdings, Inc. |
|
$ |
(1.43 |
) |
|
$ |
(21.92 |
) |
Diluted loss per common share attributable to
NCS Multistage Holdings, Inc. |
|
$ |
(1.43 |
) |
|
$ |
(21.92 |
) |
Weighted average
common shares outstanding |
|
|
|
|
|
|
Basic |
|
|
2,380 |
|
|
|
2,352 |
|
Diluted |
|
|
2,380 |
|
|
|
2,352 |
|
|
|
|
|
|
|
|
|
|
NCS MULTISTAGE HOLDINGS,
INC.CONDENSED CONSOLIDATED BALANCE
SHEETS*(In thousands, except share
data)(Unaudited)
|
|
March 31, |
|
December 31, |
|
|
2021 |
|
|
2020 |
|
Assets |
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
11,962 |
|
|
$ |
15,545 |
|
Accounts receivable—trade, net |
|
|
22,106 |
|
|
|
21,925 |
|
Inventories, net |
|
|
34,578 |
|
|
|
34,871 |
|
Prepaid expenses and other current assets |
|
|
2,878 |
|
|
|
2,975 |
|
Other current receivables |
|
|
9,045 |
|
|
|
8,358 |
|
Total current assets |
|
|
80,569 |
|
|
|
83,674 |
|
Noncurrent assets |
|
|
|
|
|
|
Property and equipment, net |
|
|
23,903 |
|
|
|
24,435 |
|
Goodwill |
|
|
15,222 |
|
|
|
15,222 |
|
Identifiable intangibles, net |
|
|
6,246 |
|
|
|
6,413 |
|
Operating lease assets |
|
|
4,806 |
|
|
|
5,170 |
|
Deposits and other assets |
|
|
3,501 |
|
|
|
3,559 |
|
Deferred income taxes, net |
|
|
207 |
|
|
|
205 |
|
Total noncurrent assets |
|
|
53,885 |
|
|
|
55,004 |
|
Total assets |
|
$ |
134,454 |
|
|
$ |
138,678 |
|
Liabilities and
Stockholders’ Equity |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
Accounts payable—trade |
|
$ |
5,720 |
|
|
$ |
4,943 |
|
Accrued expenses |
|
|
3,343 |
|
|
|
3,347 |
|
Income taxes payable |
|
|
851 |
|
|
|
653 |
|
Operating lease liabilities |
|
|
1,779 |
|
|
|
1,826 |
|
Current maturities of long-term debt |
|
|
1,379 |
|
|
|
1,347 |
|
Other current liabilities |
|
|
1,391 |
|
|
|
2,768 |
|
Total current liabilities |
|
|
14,463 |
|
|
|
14,884 |
|
Noncurrent liabilities |
|
|
|
|
|
|
Long-term debt, less current maturities |
|
|
4,302 |
|
|
|
4,442 |
|
Operating lease liabilities, long-term |
|
|
3,651 |
|
|
|
3,989 |
|
Other long-term liabilities |
|
|
1,920 |
|
|
|
1,864 |
|
Deferred income taxes, net |
|
|
67 |
|
|
|
13 |
|
Total noncurrent liabilities |
|
|
9,940 |
|
|
|
10,308 |
|
Total liabilities |
|
|
24,403 |
|
|
|
25,192 |
|
Commitments and
contingencies |
|
|
|
|
|
|
Stockholders’ equity |
|
|
|
|
|
|
Preferred stock, $0.01 par value, 10,000,000 shares authorized, no
shares issued and outstanding at |
|
|
|
|
|
|
March 31, 2021 and December 31, 2020 |
|
|
— |
|
|
|
— |
|
Common stock, $0.01 par value, 11,250,000 shares authorized,
2,396,042 shares issued |
|
|
|
|
|
|
and 2,378,879 shares outstanding at March 31, 2021 and
2,371,992 shares issued |
|
|
|
|
|
|
and 2,359,918 shares outstanding at December 31, 2020 |
|
|
24 |
|
|
|
24 |
|
Additional paid-in capital |
|
|
433,971 |
|
|
|
432,801 |
|
Accumulated other comprehensive loss |
|
|
(81,487 |
) |
|
|
(81,780 |
) |
Retained deficit |
|
|
(260,025 |
) |
|
|
(256,628 |
) |
Treasury stock, at cost; 17,163 shares at March 31, 2021 and
12,074 shares |
|
|
|
|
|
|
at December 31, 2020 |
|
|
(1,000 |
) |
|
|
(809 |
) |
Total stockholders’ equity |
|
|
91,483 |
|
|
|
93,608 |
|
Non-controlling interest |
|
|
18,568 |
|
|
|
19,878 |
|
Total equity |
|
|
110,051 |
|
|
|
113,486 |
|
Total liabilities and stockholders' equity |
|
$ |
134,454 |
|
|
$ |
138,678 |
|
|
|
|
|
|
|
|
|
|
_____________________
* Preliminary
NCS MULTISTAGE HOLDINGS,
INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS(In
thousands)(Unaudited)
|
|
Three Months Ended |
|
|
March 31, |
|
|
2021 |
|
|
2020 |
|
Cash flows from
operating activities |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(3,457 |
) |
|
$ |
(48,907 |
) |
Adjustments to reconcile net
loss to net cash (used in) provided by operating activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
|
1,104 |
|
|
|
2,585 |
|
Impairment |
|
|
— |
|
|
|
50,194 |
|
Amortization of deferred loan costs |
|
|
70 |
|
|
|
75 |
|
Share-based compensation |
|
|
2,239 |
|
|
|
2,883 |
|
Provision for inventory obsolescence |
|
|
404 |
|
|
|
237 |
|
Deferred income tax expense (benefit) |
|
|
54 |
|
|
|
(1,238 |
) |
(Gain) loss on sale of property and equipment |
|
|
(79 |
) |
|
|
46 |
|
Provision for doubtful accounts |
|
|
(66 |
) |
|
|
383 |
|
Proceeds from note receivable |
|
|
48 |
|
|
|
276 |
|
Changes in operating assets
and liabilities: |
|
|
|
|
|
|
Accounts receivable—trade |
|
|
(42 |
) |
|
|
(2,716 |
) |
Inventories, net |
|
|
(18 |
) |
|
|
(442 |
) |
Prepaid expenses and other assets |
|
|
114 |
|
|
|
(2,645 |
) |
Accounts payable—trade |
|
|
746 |
|
|
|
343 |
|
Accrued expenses |
|
|
(11 |
) |
|
|
494 |
|
Other liabilities |
|
|
(2,781 |
) |
|
|
1,758 |
|
Income taxes receivable/payable |
|
|
(140 |
) |
|
|
282 |
|
Net cash (used in) provided by operating activities |
|
|
(1,815 |
) |
|
|
3,608 |
|
Cash flows from
investing activities |
|
|
|
|
|
|
Purchases of property and
equipment |
|
|
(46 |
) |
|
|
(458 |
) |
Purchase and development of
software and technology |
|
|
(80 |
) |
|
|
— |
|
Proceeds from sales of
property and equipment |
|
|
62 |
|
|
|
20 |
|
Net cash used in investing activities |
|
|
(64 |
) |
|
|
(438 |
) |
Cash flows from
financing activities |
|
|
|
|
|
|
Payments on equipment note and
finance leases |
|
|
(324 |
) |
|
|
(432 |
) |
Line of credit borrowings |
|
|
32 |
|
|
|
5,000 |
|
Treasury shares withheld |
|
|
(191 |
) |
|
|
(151 |
) |
Distribution to noncontrolling
interest |
|
|
(1,250 |
) |
|
|
(3,050 |
) |
Net cash (used in) provided by financing activities |
|
|
(1,733 |
) |
|
|
1,367 |
|
Effect of exchange rate
changes on cash and cash equivalents |
|
|
29 |
|
|
|
(295 |
) |
Net change in cash and cash equivalents |
|
|
(3,583 |
) |
|
|
4,242 |
|
Cash and cash equivalents
beginning of period |
|
|
15,545 |
|
|
|
11,243 |
|
Cash and cash equivalents end
of period |
|
$ |
11,962 |
|
|
$ |
15,485 |
|
Noncash investing and
financing activities |
|
|
|
|
|
|
Leased assets obtained in
exchange for new finance lease liabilities |
|
$ |
246 |
|
|
$ |
301 |
|
Leased assets obtained in
exchange for new operating lease liabilities |
|
$ |
26 |
|
|
$ |
2,572 |
|
NCS MULTISTAGE HOLDINGS,
INC.RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL
INFORMATION(In thousands, except per share
data) (Unaudited)
Non-GAAP Financial Measures
EBITDA is defined as net (loss) income before interest expense,
net, income tax expense and depreciation and amortization. Adjusted
EBITDA is defined as EBITDA adjusted to exclude certain items which
we believe are not reflective of ongoing operating performance or
which, in the case of an impairment and share-based compensation,
are non-cash in nature. Adjusted EBITDA margin represents Adjusted
EBITDA as a percentage of total revenues. Adjusted EBITDA Less
Share-Based Compensation is defined as Adjusted EBITDA minus
share-based compensation expense. Adjusted Net (Loss) Income is
defined as net (loss) income attributable to NCS Multistage
Holdings, Inc. adjusted to exclude certain items which we believe
are not reflective of ongoing performance. Adjusted Net (Loss)
Earnings per Diluted Share is defined as Adjusted Net (Loss) Income
divided by our diluted weighted average common shares outstanding
during the relevant period. Free cash flow is defined as net cash
provided by (used in) operating activities less purchases of
property and equipment (inclusive of the purchase and development
of software and technology) plus proceeds from sales of property
and equipment, as presented in our consolidated statement of cash
flows. We define free cash flow less distributions to
non-controlling interest as free cash flow less distributions to
non-controlling interest, as presented in the net cash used in
financing activities section of our consolidated statements of cash
flows. Net working capital is defined as total current assets,
excluding cash and cash equivalents, minus total current
liabilities, excluding current maturities of long-term debt.
Net working capital excludes cash and cash equivalents and current
maturities of long-term debt to evaluate the investment in working
capital required to support our business. We believe that
Adjusted EBITDA, Adjusted Net (Loss) Income and Adjusted Net (Loss)
Earnings per Diluted Share are important measures that exclude
costs that management believes do not reflect our ongoing operating
performance and, in the case of Adjusted EBITDA, certain costs
associated with our capital structure. We believe that Adjusted
EBITDA Less Share-Based Compensation presents our financial
performance in a manner that is comparable to the presentation
provided by many of our peers. We believe free cash flow is useful
because it provides information to investors regarding the cash
that was available in the period that was in excess of our needs to
fund our capital expenditures and other investment needs. We
believe that free cash flow less distributions to non-controlling
interest is useful because it provides information to investors
regarding the cash that was available in the period that was in
excess of our needs to fund our capital expenditures, other
investment needs, and cash distributions to our joint venture
partner. We believe that net working capital is useful in analyzing
the cash flow and working capital needs of the Company, including
determining the efficiencies of our operations and our ability to
readily convert assets into cash. Accordingly, Adjusted EBITDA,
Adjusted EBITDA margin, Adjusted EBITDA Less Share-Based
Compensation, Adjusted Net (Loss) Income, Adjusted Net (Loss)
Earnings per Diluted Share, Free Cash Flow, Free Cash Flow Less
Distributions to Non-Controlling Interest and net working capital
are key metrics that management uses to assess the period-to-period
performance of our core business operations. We believe that
presenting Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBITDA
Less Share-Based Compensation, Adjusted Net (Loss) Income, Adjusted
Net (Loss) Earnings per Diluted Share, Free Cash Flow and Free Cash
Flow Less Distributions to Non-Controlling Interest enables
investors to assess our performance from period to period using the
same metrics utilized by management and that Adjusted EBITDA,
Adjusted EBITDA margin, Adjusted EBITDA Less Share-Based
Compensation, Adjusted Net (Loss) Income and Adjusted Net (Loss)
Earnings per Diluted Share enable investors to evaluate our
performance relative to other companies that are not subject to
such factors.
EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBITDA
Less Share-Based Compensation, Adjusted Net (Loss) Income, Adjusted
Net (Loss) Earnings per Diluted Share, Free Cash Flow, Free Cash
Flow Less Distributions to Non-Controlling Interest and net working
capital (our “non-GAAP financial measures”) are not defined under
generally accepted accounting principles (“GAAP”), are not measures
of net income, income from operations, cash provided by operating
activities, working capital or any other performance measure
derived in accordance with GAAP, and are subject to important
limitations. Our non-GAAP financial measures may not be comparable
to similarly titled measures of other companies in our industry and
are not measures of performance calculated in accordance with GAAP.
Our non-GAAP financial measures have important limitations as
analytical tools and you should not consider them in isolation or
as substitutes for analysis of our financial performance as
reported under GAAP and they should not be considered as
alternatives to net income (loss), cash provided by operating
activities, working capital or any other performance measures
derived in accordance with GAAP as measures of operating
performance or as alternatives to cash flow from operating
activities as measures of our liquidity.
The tables below set forth reconciliations of our non-GAAP
financial measures to the most directly comparable measure of
financial performance calculated under GAAP:
NET WORKING CAPITAL*
|
|
March 31, |
|
December 31, |
|
|
2021 |
|
|
2020 |
|
Working capital |
|
$ |
66,106 |
|
|
$ |
68,790 |
|
Cash and cash equivalents |
|
|
(11,962 |
) |
|
|
(15,545 |
) |
Current maturities of long
term debt |
|
|
1,379 |
|
|
|
1,347 |
|
Net working capital |
|
$ |
55,523 |
|
|
$ |
54,592 |
|
|
|
|
|
|
|
|
|
|
_____________________
* Preliminary
NCS MULTISTAGE HOLDINGS,
INC.RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL
INFORMATION(In thousands, except per share
data) (Unaudited)
ADJUSTED NET LOSS AND ADJUSTED NET LOSS
PER DILUTED SHARE
|
|
Three Months Ended |
|
|
March 31, 2021 |
|
March 31, 2020 |
|
|
Effect onNet Loss |
|
Impact on Diluted Loss Per Share |
|
Effect onNet Loss |
|
Impact on Diluted Loss Per Share |
Net loss attributable to NCS Multistage Holdings, Inc. |
|
$ |
(3,397 |
) |
|
$ |
(1.43 |
) |
|
$ |
(51,549 |
) |
|
$ |
(21.92 |
) |
Adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
Impairment (a) |
|
|
— |
|
|
|
— |
|
|
|
50,194 |
|
|
|
21.34 |
|
Foreign currency exchange (gain) loss (b) |
|
|
(160 |
) |
|
|
(0.07 |
) |
|
|
38 |
|
|
|
0.02 |
|
Income tax impact from adjustments (c) |
|
|
750 |
|
|
|
0.32 |
|
|
|
795 |
|
|
|
0.34 |
|
Adjusted net loss
attributable to NCS Multistage Holdings, Inc. |
|
$ |
(2,807 |
) |
|
$ |
(1.18 |
) |
|
$ |
(522 |
) |
|
$ |
(0.22 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
_____________________(a) Represents non-cash
impairment charges for property and equipment and intangible assets
during 2020 as the fair values were lower than the carrying
values.(b) Represents realized and unrealized
foreign currency translation gains and losses primarily due to
movement in the foreign currency exchange rates during the
applicable periods.(c) Represents the income tax
adjustments including the valuation allowance recorded to reduce
the carrying value of both our U.S. and Canadian deferred tax
assets.
NCS MULTISTAGE HOLDINGS,
INC.RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL
INFORMATION(In thousands)
(Unaudited)
ADJUSTED EBITDA, ADJUSTED EBITDA MARGIN,
AND ADJUSTED EBITDA LESS SHARE-BASED COMPENSATION
|
|
Three Months Ended |
|
|
March 31, |
|
|
2021 |
|
|
2020 |
|
Net loss |
|
$ |
(3,457 |
) |
|
$ |
(48,907 |
) |
Income tax expense
(benefit) |
|
|
128 |
|
|
|
(925 |
) |
Interest expense, net |
|
|
168 |
|
|
|
322 |
|
Depreciation |
|
|
937 |
|
|
|
1,452 |
|
Amortization |
|
|
167 |
|
|
|
1,133 |
|
EBITDA |
|
|
(2,057 |
) |
|
|
(46,925 |
) |
Impairment (a) |
|
|
— |
|
|
|
50,194 |
|
Share-based compensation
(b) |
|
|
1,170 |
|
|
|
2,950 |
|
Professional fees (c) |
|
|
943 |
|
|
|
1,388 |
|
Foreign currency exchange gain
(d) |
|
|
(150 |
) |
|
|
(10 |
) |
Severance and other
termination benefits (e) |
|
|
— |
|
|
|
1,346 |
|
Other (f) |
|
|
168 |
|
|
|
295 |
|
Adjusted EBITDA |
|
$ |
74 |
|
|
$ |
9,238 |
|
Adjusted EBITDA Margin |
|
|
0 |
% |
|
|
17 |
% |
Adjusted EBITDA Less Share-Based Compensation |
|
$ |
(1,096 |
) |
|
$ |
6,288 |
|
|
|
|
|
|
|
|
|
|
_____________________(a) Represents non-cash
impairment charges for property and equipment and intangible assets
during 2020 as the fair values were lower than the carrying
values.(b) Represents non-cash compensation
charges related to share-based compensation granted to our
officers, employees and directors.(c) Represents
non-capitalizable costs of professional services incurred in
connection with legal proceedings and the evaluation of potential
acquisitions.(d) Represents realized and
unrealized foreign currency translation gains and losses primarily
due to movement in the foreign currency exchange rates during the
applicable periods.(e) Reflects charges incurred
in connection with the reductions in workforce implemented in
2020.(f) Represents the impact of a research and
development subsidy that is included in income tax expense
(benefit) in accordance with GAAP along with other charges and
credits.
FREE CASH FLOW
|
|
Three Months Ended |
|
|
March 31, |
|
|
2021 |
|
|
2020 |
|
Net cash (used in) provided by operating activities |
|
$ |
(1,815 |
) |
|
$ |
3,608 |
|
Purchases of property and
equipment |
|
|
(46 |
) |
|
|
(458 |
) |
Purchase and development of
software and technology |
|
|
(80 |
) |
|
|
— |
|
Proceeds from sales of
property and equipment |
|
|
62 |
|
|
|
20 |
|
Free cash flow |
|
$ |
(1,879 |
) |
|
$ |
3,170 |
|
|
|
|
|
|
|
|
|
|
FREE CASH FLOW LESS DISTRIBUTIONS TO
NON-CONTROLLING INTEREST
|
|
Three Months Ended |
|
|
March 31, |
|
|
2021 |
|
|
2020 |
|
Net cash (used in) provided by operating activities |
|
$ |
(1,815 |
) |
|
$ |
3,608 |
|
Purchases of property and
equipment |
|
|
(46 |
) |
|
|
(458 |
) |
Purchase and development of
software and technology |
|
|
(80 |
) |
|
|
— |
|
Proceeds from sales of
property and equipment |
|
|
62 |
|
|
|
20 |
|
Distribution to
non-controlling interest |
|
|
(1,250 |
) |
|
|
(3,050 |
) |
Free cash flow less
distributions to non-controlling interest |
|
$ |
(3,129 |
) |
|
$ |
120 |
|
|
|
|
|
|
|
|
|
|
NCS MULTISTAGE HOLDINGS,
INC.REVENUES BY GEOGRAPHIC
AREA(In thousands)
(Unaudited)
|
|
Three Months Ended |
|
|
March 31, |
|
|
2021 |
|
2020 |
United States |
|
|
|
|
|
|
Product sales |
|
$ |
6,296 |
|
$ |
17,440 |
Services |
|
|
1,527 |
|
|
3,528 |
Total United States |
|
|
7,823 |
|
|
20,968 |
Canada |
|
|
|
|
|
|
Product sales |
|
|
13,878 |
|
|
20,807 |
Services |
|
|
6,357 |
|
|
8,559 |
Total Canada |
|
|
20,235 |
|
|
29,366 |
Other
Countries |
|
|
|
|
|
|
Product sales |
|
|
— |
|
|
1,183 |
Services |
|
|
456 |
|
|
3,033 |
Total Other Countries |
|
|
456 |
|
|
4,216 |
Total |
|
|
|
|
|
|
Product sales |
|
|
20,174 |
|
|
39,430 |
Services |
|
|
8,340 |
|
|
15,120 |
Total revenues |
|
$ |
28,514 |
|
$ |
54,550 |
|
|
|
|
|
|
|
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