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ncsm-20230331x10q

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

 Quarterly Report Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2023

 Transition Report Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

For the transition period from ______ to ______

Commission file number: 001-38071

NCS Multistage Holdings, Inc.

(Exact name of registrant as specified in its charter)


	Delaware		46-1527455
	(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification number)

	19350 State Highway 249, Suite 600
	Houston, Texas		77070
	(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (281) 453-2222

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	NCSM	Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer		Accelerated filer	
Non-accelerated filer		Smaller reporting company	
		Emerging growth company	

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes  No 

As of May 5, 2023, there were 2,438,877 shares of common stock outstanding.

Table of Contents

		Page
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Comprehensive Loss	5
	Condensed Consolidated Statements of Stockholders’ Equity	6
	Condensed Consolidated Statements of Cash Flows	7
	Notes to Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26

Item 4.	Controls and Procedures	26

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	27

Item 1A.	Risk Factors	27

Item 6.	Exhibits	28

Signatures		29

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

NCS MULTISTAGE HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)



	March 31,		December 31,
	2023		2022
Assets
Current assets
Cash and cash equivalents	$	13,633	$	16,234
Accounts receivable—trade, net		29,722		27,846
Inventories, net		40,572		37,042
Prepaid expenses and other current assets		2,095		2,815
Other current receivables		5,144		3,726
Total current assets		91,166		87,663
Noncurrent assets
Property and equipment, net		23,679		23,316
Goodwill		15,222		15,222
Identifiable intangibles, net		4,909		5,076
Operating lease assets		4,246		4,515
Deposits and other assets		2,218		2,761
Deferred income taxes, net		46		46
Total noncurrent assets		50,320		50,936
Total assets	$	141,486	$	138,599
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable—trade	$	7,910	$	7,549
Accrued expenses		4,670		4,391
Income taxes payable		396		468
Operating lease liabilities		1,273		1,274
Current maturities of long-term debt		1,832		1,489
Other current liabilities		1,605		2,522
Total current liabilities		17,686		17,693
Noncurrent liabilities
Long-term debt, less current maturities		6,561		6,437
Operating lease liabilities, long-term		3,391		3,680
Accrual for legal contingencies		17,514		—
Other long-term liabilities		1,325		1,328
Deferred income taxes, net		193		199
Total noncurrent liabilities		28,984		11,644
Total liabilities		46,670		29,337
Commitments and contingencies (Note 9)
Stockholders’ equity
Preferred stock, $0.01 par value, 10,000,000 shares authorized, no shares issued and outstanding at
March 31, 2023 and December 31, 2022		—		—
Common stock, $0.01 par value, 11,250,000 shares authorized, 2,476,298 shares issued
and 2,438,877 shares outstanding at March 31, 2023 and 2,434,809 shares issued
and 2,408,474 shares outstanding at December 31, 2022		25		24
Additional paid-in capital		441,387		440,475
Accumulated other comprehensive loss		(85,716)		(85,617)
Retained deficit		(277,433)		(262,464)
Treasury stock, at cost, 37,421 shares at March 31, 2023 and 26,335 shares
at December 31, 2022		(1,653)		(1,389)
Total stockholders' equity		76,610		91,029
Non-controlling interest		18,206		18,233
Total equity		94,816		109,262
Total liabilities and stockholders' equity	$	141,486	$	138,599

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

NCS MULTISTAGE HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)



	Three Months Ended
	March 31,
	2023		2022
Revenues
Product sales	$	31,430	$	26,213
Services		12,124		12,899
Total revenues		43,554		39,112
Cost of sales
Cost of product sales, exclusive of depreciation ‎ and amortization expense shown below		18,833		17,757
Cost of services, exclusive of depreciation ‎ and amortization expense shown below		6,180		6,446
Total cost of sales, exclusive of depreciation ‎ and amortization expense shown below		25,013		24,203
Selling, general and administrative expenses		16,151		16,024
Depreciation		943		921
Amortization		167		167
Income (loss) from operations		1,280		(2,203)
Other income (expense)
Interest expense, net		(209)		(183)
Provision for litigation		(17,514)		—
Other income, net		292		379
Foreign currency exchange gain, net		55		256
Total other (expense) income		(17,376)		452
Loss before income tax		(16,096)		(1,751)
Income tax benefit		(1,100)		(22)
Net loss		(14,996)		(1,729)
Net loss attributable to non-controlling interest		(27)		(194)
Net loss attributable to ‎ NCS Multistage Holdings, Inc.	$	(14,969)	$	(1,535)
Loss per common share
Basic loss per common share attributable to ‎ NCS Multistage Holdings, Inc.	$	(6.10)	$	(0.64)
Diluted loss per common share attributable to ‎ NCS Multistage Holdings, Inc.	$	(6.10)	$	(0.64)
Weighted average common shares outstanding
Basic		2,452		2,414
Diluted		2,452		2,414

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

NCS MULTISTAGE HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

(Unaudited)



	Three Months Ended
	March 31,
	2023		2022
Net loss	$	(14,996)	$	(1,729)
Foreign currency translation adjustments, net of tax of $0		(99)		541
Comprehensive loss		(15,095)		(1,188)
Less: Comprehensive loss attributable to non-controlling interest		(27)		(194)
Comprehensive loss attributable to NCS Multistage Holdings, Inc.	$	(15,068)	$	(994)

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

NCS MULTISTAGE HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except share data)

(Unaudited)


	Three Months Ended March 31, 2023
	Preferred Stock			Common Stock			Additional ‎Paid-In		Accumulated ‎Other ‎Comprehensive		Retained		Treasury Stock			Non-controlling		Total Stockholders'
	Shares	Amount		Shares	Amount		Capital		Loss		Deficit		Shares	Amount		Interest		Equity
Balances as of December 31, 2022	—	$	—	2,434,809	$	24	$	440,475	$	(85,617)	$	(262,464)	(26,335)	$	(1,389)	$	18,233	$	109,262
Share-based compensation	—		—	—		—		913		—		—	—		—		—		913
Net loss	—		—	—		—		—		—		(14,969)	—		—		(27)		(14,996)
Vesting of restricted stock	—		—	41,489		1		(1)		—		—	—		—		—		—
Shares withheld	—		—	—		—		—		—		—	(11,086)		(264)		—		(264)
Currency translation adjustment	—		—	—		—		—		(99)		—	—		—		—		(99)
Balances as of March 31, 2023	—	$	—	2,476,298	$	25	$	441,387	$	(85,716)	$	(277,433)	(37,421)	$	(1,653)	$	18,206	$	94,816


	Three Months Ended March 31, 2022
	Preferred Stock			Common Stock			Additional ‎Paid-In		Accumulated ‎Other ‎Comprehensive		Retained		Treasury Stock			Non-controlling		Total Stockholders'
	Shares	Amount		Shares	Amount		Capital		Loss		Deficit		Shares	Amount		Interest		Equity
Balances as of December 31, 2021	—	$	—	2,397,766	$	24	$	437,022	$	(82,094)	$	(261,362)	(17,392)	$	(1,006)	$	18,083	$	110,667
Share-based compensation	—		—	—		—		805		—		—	—		—		—		805
Net loss	—		—	—		—		—		—		(1,535)	—		—		(194)		(1,729)
Vesting of restricted stock	—		—	34,066		—		—		—		—	—		—		—		—
Shares withheld	—		—	—		—		—		—		—	(8,694)		(372)		—		(372)
Currency translation adjustment	—		—	—		—		—		541		—	—		—		—		541
Balances as of March 31, 2022	—	$	—	2,431,832	$	24	$	437,827	$	(81,553)	$	(262,897)	(26,086)	$	(

FORM 10-Q

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

CONDENSED CONSOLIDATED BALANCE SHEETS

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY