NCS Multistage Holdings, Inc. Announces Fourth Quarter and Full Year 2017 Results
Fourth Quarter Highlights
- Total revenue of
$50.2 million , a 42% period-over-period increase - Net loss of
$(3.3) million ; adjusted net income of$0.4 million - Loss per diluted share of
$(0.08) ; adjusted earnings per diluted share of$0.01 - Adjusted EBITDA of
$10.4 million , a$3.6 million increase from the prior year, and a 21% Adjusted EBITDA margin - Total liquidity of
$88.8 million , comprised of$33.8 million in cash on hand and$55.0 million of revolver availability
Financial Review
Fourth Quarter 2017 Financial Results
Revenues were
Net loss was
Adjusted EBITDA was
Full Year 2017 Financial Results
For the year ended
NCS completed its initial public offering of its common stock on
Capital Expenditures and Liquidity
The Company received
As of December 31, 2017, the Company had
Review and Outlook
NCS’s Chief Executive Officer,
We increased our revenue for the full year by 105% compared to 2016, with strong growth from the U.S., Canadian and international markets, grew our Adjusted EBITDA to
We have been encouraged by overall customer activity levels thus far in 2018, and continue to expect that we will be able to grow our revenues by 35% to 45% this year, as we continue to add to our customer base and deliver technology to our clients that helps them optimize well performance and field development strategies in a way that enhances their return on capital.”
Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income (Loss) and Adjusted Net Earnings (Loss) per Diluted Share 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 fourth quarter 2017 and full year 2017 results on
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
About
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. 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. Factors that could cause our actual results to differ materially from the results contemplated by such forward-looking statements include, but are not limited to, declines in the level of oil and natural gas exploration and production activity within
Contact
Chief Financial Officer
(281) 453-2222
IR@ncsmultistage.com
NCS MULTISTAGE HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) |
||||||||||||||||
Three Months Ended | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2017 |
2016 |
2017 |
2016 |
|||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||
Revenues | ||||||||||||||||
Product sales | $ | 30,304 | $ | 25,915 | $ | 144,666 | $ | 73,220 | ||||||||
Services | 19,880 | 9,526 | 56,968 | 25,259 | ||||||||||||
Total revenues | 50,184 | 35,441 | 201,634 | 98,479 | ||||||||||||
Cost of sales | ||||||||||||||||
Cost of product sales, exclusive of depreciation and amortization expense shown below |
16,514 | 15,013 | 76,288 | 40,511 | ||||||||||||
Cost of services, exclusive of depreciation and amortization expense shown below |
8,081 | 4,923 | 22,504 | 13,322 | ||||||||||||
Total cost of sales, exclusive of depreciation and amortization expense shown below |
24,595 | 19,936 | 98,792 | 53,833 | ||||||||||||
Selling, general and administrative expenses | 18,135 | 11,698 | 64,707 | 37,061 | ||||||||||||
Depreciation | 1,139 | 431 | 3,193 | 1,766 | ||||||||||||
Amortization | 5,977 | 5,908 | 24,458 | 23,801 | ||||||||||||
Change in fair value of contingent consideration | 4,940 | — | 5,525 | — | ||||||||||||
(Loss) income from operations | (4,602 | ) | (2,532 | ) | 4,959 | (17,982 | ) | |||||||||
Other income (expense) | ||||||||||||||||
Interest expense, net | (555 | ) | (1,548 | ) | (4,306 | ) | (6,286 | ) | ||||||||
Other (expense) income, net | (47 | ) | 74 | 1,085 | 45 | |||||||||||
Foreign currency exchange gain (loss) | — | 2,192 | 224 | (2,522 | ) | |||||||||||
Total other (expense) income | (602 | ) | 718 | (2,997 | ) | (8,763 | ) | |||||||||
(Loss) income before income tax | (5,204 | ) | (1,814 | ) | 1,962 | (26,745 | ) | |||||||||
Income tax (benefit) expense | (1,352 | ) | (883 | ) | 670 | (8,818 | ) | |||||||||
Net (loss) income | (3,852 | ) | (931 | ) | 1,292 | (17,927 | ) | |||||||||
Net loss attributable to non-controlling interest | (509 | ) | — | (810 | ) | — | ||||||||||
Net (loss) income attributable to NCS Multistage Holdings, Inc. |
$ | (3,343 | ) | $ | (931 | ) | $ | 2,102 | $ | (17,927 | ) | |||||
(Loss) earnings per common share | ||||||||||||||||
Basic (loss) earnings per common share attributable to NCS Multistage Holdings, Inc. |
$ | (0.08 | ) | (0.03 | ) | $ | 0.05 | $ | (0.53 | ) | ||||||
Diluted (loss) earnings per common share attributable to NCS Multistage Holdings, Inc. |
$ | (0.08 | ) | (0.03 | ) | $ | 0.05 | $ | (0.53 | ) | ||||||
Weighted average common shares outstanding | ||||||||||||||||
Basic | 43,912 | 34,006 | 40,484 | 34,008 | ||||||||||||
Diluted | 43,912 | 34,006 | 43,583 | 34,008 | ||||||||||||
NCS MULTISTAGE HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share data) |
||||||||
December 31, | December 31, | |||||||
2017 | 2016 | |||||||
(Unaudited) | ||||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 33,809 | $ | 18,275 | ||||
Accounts receivable—trade, net | 47,880 | 32,116 | ||||||
Inventories | 33,135 | 17,017 | ||||||
Prepaid expenses and other current assets | 1,616 | 2,445 | ||||||
Other current receivables | 1,369 | 3,053 | ||||||
Deferred income taxes, net | — | 2,116 | ||||||
Total current assets | 117,809 | 75,022 | ||||||
Noncurrent assets | ||||||||
Property and equipment, net | 23,651 | 9,759 | ||||||
Goodwill | 184,478 | 122,077 | ||||||
Identifiable intangibles, net | 136,412 | 118,697 | ||||||
Deposits and other assets | 1,563 | 1,272 | ||||||
Total noncurrent assets | 346,104 | 251,805 | ||||||
Total assets | $ | 463,913 | $ | 326,827 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current liabilities | ||||||||
Accounts payable—trade | $ | 7,448 | $ | 10,258 | ||||
Accrued expenses | 6,673 | 3,290 | ||||||
Income taxes payable | 10,561 | — | ||||||
Other current liabilities | 1,673 | 3,223 | ||||||
Current maturities of long-term debt | 5,114 | 772 | ||||||
Total current liabilities | 31,469 | 17,543 | ||||||
Noncurrent liabilities | ||||||||
Long-term debt, less current maturities | 21,922 | 88,394 | ||||||
Contingent consideration | 12,835 | — | ||||||
Other long-term liabilities | 4,513 | 717 | ||||||
Deferred income taxes, net | 24,183 | 42,695 | ||||||
Total noncurrent liabilities | 63,453 | 131,806 | ||||||
Total liabilities | 94,922 | 149,349 | ||||||
Commitments and contingencies | ||||||||
Stockholders’ equity | ||||||||
Preferred stock, $0.01 par value, 10,000,000 shares authorized, one share issued and outstanding at | — | — | ||||||
December 31, 2017 and one share authorized, issued and outstanding at December 31, 2016 | ||||||||
Common stock, $0.01 par value, 225,000,000 shares authorized, 43,931,484 shares issued | ||||||||
and 43,913,136 shares outstanding at December 31, 2017 and 54,000,000 shares authorized, | ||||||||
34,024,326 shares issued and 34,005,978 shares outstanding at December 31, 2016 | 439 | 340 | ||||||
Additional paid-in capital | 399,426 | 237,566 | ||||||
Accumulated other comprehensive loss | (66,707 | ) | (82,015 | ) | ||||
Retained earnings | 23,864 | 21,762 | ||||||
Treasury stock, at cost; 18,348 shares at December 31, 2017 and at December 31, 2016 | (175 | ) | (175 | ) | ||||
Total stockholders’ equity | 356,847 | 177,478 | ||||||
Non-controlling interest | 12,144 | — | ||||||
Total equity | 368,991 | 177,478 | ||||||
Total liabilities and stockholders' equity | $ | 463,913 | $ | 326,827 | ||||
NCS MULTISTAGE HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) |
||||||||
Year Ended December 31, | ||||||||
2017 | 2016 | |||||||
(Unaudited) | ||||||||
Cash flows from operating activities | ||||||||
Net income (loss) | $ | 1,292 | $ | (17,927 | ) | |||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
||||||||
Depreciation and amortization | 27,651 | 25,567 | ||||||
Amortization of deferred loan cost | 444 | 740 | ||||||
Share-based compensation | 6,108 | 1,354 | ||||||
Provision for inventory obsolescence | — | 2,415 | ||||||
Deferred income tax benefit | (18,959 | ) | (9,266 | ) | ||||
(Gain) loss on sale of property and equipment | (33 | ) | (143 | ) | ||||
Foreign exchange (gain) loss on financing item | (1,760 | ) | 2,576 | |||||
Deferred loan costs | 1,422 | — | ||||||
Change in fair value of contingent consideration | 5,525 | — | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable—trade | (9,490 | ) | (6,482 | ) | ||||
Inventories | (10,608 | ) | 3,540 | |||||
Prepaid expenses and other assets | (114 | ) | (119 | ) | ||||
Accounts payable—trade | (3,755 | ) | 5,131 | |||||
Accrued expenses | 2,843 | 1,861 | ||||||
Other liabilities | (247 | ) | 1,209 | |||||
Income taxes receivable/payable | 15,795 | 228 | ||||||
Net cash provided by operating activities | 16,114 | 10,684 | ||||||
Cash flows from investing activities | ||||||||
Purchases of property and equipment | (5,366 | ) | (1,157 | ) | ||||
Proceeds from sales of property and equipment | 354 | 317 | ||||||
Purchases of intangible assets | (54 | ) | — | |||||
Proceeds (funding) from short-term note receivable | 1,000 | (1,000 | ) | |||||
Acquisitions of businesses, net of cash acquired | (81,155 | ) | — | |||||
Net cash used by investing activities | (85,221 | ) | (1,840 | ) | ||||
Cash flows from financing activities | ||||||||
Equipment note borrowings | 1,533 | — | ||||||
Payments on equipment note and capital leases | (704 | ) | — | |||||
Promissory note borrowings | 8,995 | — | ||||||
Payments on promissory note | (5,682 | ) | — | |||||
Line of credit borrowings | 20,000 | — | ||||||
Payment of deferred loan cost related to new credit agreement | (971 | ) | — | |||||
Payments related to public offering | (2,178 | ) | (242 | ) | ||||
Proceeds from related party note receivable | 752 | — | ||||||
Repayment of term note | (89,077 | ) | — | |||||
Proceeds from the exercise of options for common stock, net | 9 | — | ||||||
Purchases of treasury stock | — | (175 | ) | |||||
Proceeds from issuance of common stock, net of offering costs | 151,356 | 102 | ||||||
Net cash provided (used) by financing activities | 84,033 | (315 | ) | |||||
Effect of exchange rate changes on cash and cash equivalents | 608 | 201 | ||||||
Net change in cash and cash equivalents | 15,534 | 8,730 | ||||||
Cash and cash equivalents beginning of period | 18,275 | 9,545 | ||||||
Cash and cash equivalents end of period | $ | 33,809 | $ | 18,275 | ||||
Supplemental cash flow information | ||||||||
Cash paid for interest, net of amounts capitalized | $ | 3,023 | $ | 5,447 | ||||
Cash paid for income taxes (net of refunds) | 4,033 | 130 | ||||||
Noncash investing and financing activities | ||||||||
Unpaid costs related to public offering | — | 708 | ||||||
Issuance of common stock for business acquisition | 6,907 | — | ||||||
Assets obtained by entering into a capital lease | 1,092 | — | ||||||
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION
(In thousands, except per share data)
(Unaudited)
Non-GAAP Financial Measures
EBITDA is defined as net income (loss) before interest expense, net, income tax expense (benefit) and depreciation and amortization. Adjusted EBITDA is defined as EBITDA adjusted to exclude certain items which we believe are not reflective of ongoing performance or which, in the case of share-based compensation, are non-cash in nature. Adjusted EBITDA margin represents Adjusted EBITDA as a percentage of total revenues. Adjusted Net Income (Loss) is defined as net income (loss) attributable to
EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income (Loss) and Adjusted Net Earnings (Loss) per Diluted Share (our “non-GAAP financial measures”) are not defined under generally accepted accounting principles (“GAAP”), are not measures of net income, income from operations 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) 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:
ADJUSTED NET INCOME (LOSS) AND ADJUSTED NET EARNINGS (LOSS) PER DILUTED SHARE | |||||||||||||||||||||||||||||||
Three Months Ended | Year Ended | ||||||||||||||||||||||||||||||
December 31, 2017 | December 31, 2016 | December 31, 2017 | December 31, 2016 | ||||||||||||||||||||||||||||
Effect on Net (Loss) Income (After-Tax) |
Impact on Diluted (Loss) Earnings Per Share |
Effect on Net Loss (After-Tax) |
Impact on Diluted Loss Per Share |
Effect on Net Income (After-Tax) |
Impact on Diluted Earnings Per Share |
Effect on Net Loss (After-Tax) |
Impact on Diluted Loss Per Share |
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Net (loss) income attributable to NCS Multistage Holdings, Inc. |
$ | (3,343 | ) | $ | (0.08 | ) | $ | (931 | ) | $ | (0.03 | ) | $ | 2,102 | $ | 0.05 | $ | (17,927 | ) | $ | (0.53 | ) | |||||||||
Adjustments (after tax) | |||||||||||||||||||||||||||||||
Write-off of debt issuance costs (a) | — | — | — | — | 936 | 0.02 | — | — | |||||||||||||||||||||||
Restructuring charges (b) | — | — | (17 | ) | — | — | — | 185 | 0.01 | ||||||||||||||||||||||
IPO-related professional expense (c) | 32 | — | 835 | 0.02 | 1,517 | 0.03 | 1,091 | 0.03 | |||||||||||||||||||||||
Acquisition and merger costs (d) | (18 | ) | — | 184 | 0.01 | 669 | 0.02 | 822 | 0.02 | ||||||||||||||||||||||
Realized and unrealized (gains) losses (e) | 49 | — | (1,124 | ) | (0.03 | ) | (169 | ) | — | 1,690 | 0.05 | ||||||||||||||||||||
Change in fair value of contingent consideration (f) | 3,657 | 0.09 | — | — | 3,638 | 0.08 | — | — | |||||||||||||||||||||||
Adjusted net income (loss) attributable to NCS Multistage Holdings, Inc. |
$ | 377 | $ | 0.01 | $ | (1,053 | ) | $ | (0.03 | ) | $ | 8,693 | $ | 0.20 | $ | (14,139 | ) | $ | (0.42 | ) | |||||||||||
_____________________
- Includes the remaining debt issuance costs of
$1,422 related to the prior credit agreement that were expensed when the debt was repaid with a portion of our net proceeds from the IPO during the second quarter of 2017. - Represents severance and other expenses associated with headcount reductions and other cost savings initiated as part of our restructuring initiatives.
- Represents non-capitalizable costs of professional services incurred in connection with our IPO.
- Represents costs of professional services incurred in connection with our acquisition of a 50% interest in Repeat Precision and Spectrum acquisition.
- Represents realized and unrealized foreign currency translation gains and losses primarily in respect of our indebtedness.
- Represents the change in the fair value of the earn-outs associated with our acquisitions.
NCS MULTISTAGE HOLDINGS, INC. RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION (In thousands) (Unaudited) |
||||||||||||||||
ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN |
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Three Months Ended | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Net (loss) income | $ | (3,852 | ) | $ | (931 | ) | $ | 1,292 | $ | (17,927 | ) | |||||
Income tax (benefit) expense | (1,352 | ) | (883 | ) | 670 | (8,818 | ) | |||||||||
Interest expense, net (a) | 555 | 1,548 | 4,306 | 6,286 | ||||||||||||
Depreciation | 1,139 | 431 | 3,193 | 1,766 | ||||||||||||
Amortization | 5,977 | 5,908 | 24,458 | 23,801 | ||||||||||||
EBITDA | 2,467 | 6,073 | 33,919 | 5,108 | ||||||||||||
Share-based compensation (b) | 2,219 | 348 | 6,108 | 1,354 | ||||||||||||
Restructuring charges (c) | — | (35 | ) | — | 277 | |||||||||||
Professional fees (d) | 533 | 2,050 | 3,870 | 3,079 | ||||||||||||
Unrealized foreign currency (gain) loss (e) | (3,169 | ) | (2,303 | ) | 17,006 | 2,612 | ||||||||||
Realized foreign currency loss (gain) (f) | 3,169 | 111 | (17,230 | ) | (89 | ) | ||||||||||
Change in fair value of contingent consideration (g) | 4,940 | — | 5,525 | — | ||||||||||||
Other (h) | 234 | 579 | 300 | 1,539 | ||||||||||||
Adjusted EBITDA | $ | 10,393 | $ | 6,823 | $ | 49,498 | $ | 13,880 | ||||||||
Adjusted EBITDA Margin | 21 | % | 19 | % | 25 | % | 14 | % | ||||||||
_____________________
- Includes the remaining debt issuance costs of
$1,422 related to the prior credit agreement that were expensed when the debt was repaid with a portion of our net proceeds from the IPO during the second quarter of 2017. - Represents non-cash compensation charges related to share-based compensation granted to our officers, employees and directors.
- Represents severance and other expenses associated with headcount reductions and other cost savings initiated as part of our restructuring initiatives.
- Represents non-capitalizable costs of professional services incurred in connection with our IPO, financings and refinancings and the evaluation of proposed and completed acquisitions.
- Represents unrealized foreign currency translation gains and losses primarily in respect of our indebtedness.
- Represents realized foreign currency translation gains and losses with respect to principal and interest payments related to our indebtedness.
- Represents the change in the fair value of the earn-outs associated with our acquisitions.
- Represents the impact of a research and development subsidy that is included in income tax expense (benefit) in accordance with GAAP, fees incurred in connection with refinancing our credit facilities, arbitration awards, board of directors fees and travel expenses prior to our initial public offering as permitted by the terms of our prior credit agreement and other charges and credits.
NCS MULTISTAGE HOLDINGS, INC. REVENUE BY GEOGRAPHIC AREA (In thousands) (Unaudited) |
||||||||||||
Three Months Ended | Year Ended | |||||||||||
December 31, | December 31, | |||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||
United States | ||||||||||||
Product Sales | $ | 8,525 | $ | 7,133 | $ | 41,261 | $ | 17,595 | ||||
Services | 11,616 | 1,566 | 22,659 | 4,747 | ||||||||
Total United States | 20,141 | 8,699 | 63,920 | 22,342 | ||||||||
Canada | ||||||||||||
Product Sales | 21,762 | 18,257 | 96,716 | 53,088 | ||||||||
Services | 7,611 | 6,707 | 31,183 | 16,994 | ||||||||
Total Canada | 29,373 | 24,964 | 127,899 | 70,082 | ||||||||
Other Countries | ||||||||||||
Product Sales | 17 | 525 | 6,689 | 2,537 | ||||||||
Services | 653 | 1,253 | 3,126 | 3,518 | ||||||||
Total Other Countries | 670 | 1,778 | 9,815 | 6,055 | ||||||||
Total | ||||||||||||
Product Sales | 30,304 | 25,915 | 144,666 | 73,220 | ||||||||
Services | 19,880 | 9,526 | 56,968 | 25,259 | ||||||||
Total | $ | 50,184 | $ | 35,441 | $ | 201,634 | $ | 98,479 |