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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 September 30, 2023

OR

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 October 27, 2023, there were 2,439,126 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 Income (Loss)

5

Condensed Consolidated Statements of Stockholders’ Equity

6

Condensed Consolidated Statements of Cash Flows

8

Notes to Unaudited Condensed Consolidated Financial Statements

9

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

19

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

31

 

Item 4.

Controls and Procedures

31

 

 PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

32

 

Item 1A.

Risk Factors

32

Item 6.

Exhibits

33

Signatures

34

 

2


PART I. FINANCIAL INFORMATION

ITEM 1.  Financial Statements

NCS MULTISTAGE HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)

September 30,

December 31,

2023

2022

Assets

Current assets

Cash and cash equivalents

$

11,398 

$

16,234 

Accounts receivable—trade, net

30,252 

27,846 

Inventories, net

42,035 

37,042 

Prepaid expenses and other current assets

2,342 

2,815 

Other current receivables

4,037 

3,726 

Total current assets

90,064 

87,663 

Noncurrent assets

Property and equipment, net

24,390 

23,316 

Goodwill

15,222 

15,222 

Identifiable intangibles, net

4,574 

5,076 

Operating lease assets

5,138 

4,515 

Deposits and other assets

2,057 

2,761 

Deferred income taxes, net

257 

46 

Total noncurrent assets

51,638 

50,936 

Total assets

$

141,702 

$

138,599 

Liabilities and Stockholders’ Equity

Current liabilities

Accounts payable—trade

$

9,402 

$

7,549 

Accrued expenses

5,065 

4,391 

Income taxes payable

16 

468 

Operating lease liabilities

1,562 

1,274 

Current maturities of long-term debt

1,755 

1,489 

Other current liabilities

2,031 

2,522 

Total current liabilities

19,831 

17,693 

Noncurrent liabilities

Long-term debt, less current maturities

6,543 

6,437 

Operating lease liabilities, long-term

4,125 

3,680 

Accrual for legal contingencies

40,750 

Other long-term liabilities

1,281 

1,328 

Deferred income taxes, net

486 

199 

Total noncurrent liabilities

53,185 

11,644 

Total liabilities

73,016 

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

September 30, 2023 and December 31, 2022

Common stock, $0.01 par value, 11,250,000 shares authorized, 2,476,465 shares issued

and 2,438,994 shares outstanding at September 30, 2023 and 2,434,809 shares issued

and 2,408,474 shares outstanding at December 31, 2022

25 

24 

Additional paid-in capital

443,759 

440,475 

Accumulated other comprehensive loss

(86,253)

(85,617)

Retained deficit

(305,256)

(262,464)

Treasury stock, at cost, 37,471 shares at September 30, 2023 and 26,335 shares

at December 31, 2022

(1,654)

(1,389)

Total stockholders' equity

50,621 

91,029 

Non-controlling interest

18,065 

18,233 

Total equity

68,686 

109,262 

Total liabilities and stockholders' equity

$

141,702 

$

138,599 

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

3


NCS MULTISTAGE HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2023

2022

2023

2022

Revenues

Product sales

$

27,286

$

33,965

$

76,149

$

79,549

Services

10,993

14,905

31,075

35,897

Total revenues

38,279

48,870

107,224

115,446

Cost of sales

Cost of product sales, exclusive of depreciation
    and amortization expense shown below

17,118

20,754

47,945

51,910

Cost of services, exclusive of depreciation
    and amortization expense shown below

5,449

7,640

16,564

19,210

Total cost of sales, exclusive of depreciation
    and amortization expense shown below

22,567

28,394

64,509

71,120

Selling, general and administrative expenses

12,669

15,379

43,297

45,148

Depreciation

1,001

882

2,892

2,742

Amortization

168

168

502

502

Income (loss) from operations

1,874

4,047

(3,976)

(4,066)

Other income (expense)

Interest expense, net

(27)

(204)

(447)

(794)

Provision for litigation, net of recoveries

(98)

(42,498)

Other income, net

1,983

564

3,753

1,556

Foreign currency exchange loss, net

(157)

(563)

(79)

(562)

Total other income (expense)

1,701

(203)

(39,271)

200

Income (loss) before income tax

3,575

3,844

(43,247)

(3,866)

Income tax benefit

(537)

(120)

(287)

(623)

Net income (loss)

4,112

3,964

(42,960)

(3,243)

Net (loss) income attributable to non-controlling interest

(296)

29

(168)

(162)

Net income (loss) attributable to
    NCS Multistage Holdings, Inc.

$

4,408

$

3,935

$

(42,792)

$

(3,081)

Earnings (loss) per common share

Basic earnings (loss) per common share attributable to
    NCS Multistage Holdings, Inc.

$

1.78

$

1.61

$

(17.33)

$

(1.27)

Diluted earnings (loss) per common share attributable to
    NCS Multistage Holdings, Inc.

$

1.77

$

1.58

$

(17.33)

$

(1.27)

Weighted average common shares outstanding

Basic

2,479

2,438

2,469

2,430

Diluted

2,489

2,488

2,469

2,430

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

4


NCS MULTISTAGE HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

(Unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2023

2022

2023

2022

Net income (loss)

$

4,112

$

3,964

$

(42,960)

$

(3,243)

Foreign currency translation adjustments, net of tax of $0

(979)

(3,359)

(636)

(4,118)

Comprehensive income (loss)

3,133

605

(43,596)

(7,361)

Less: Comprehensive (loss) income attributable to
non-controlling interest

(296)

29

(168)

(162)

Comprehensive income (loss) attributable to NCS
Multistage Holdings, Inc.

$

3,429

$

576

$

(43,428)

$

(7,199)

 

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

5


NCS MULTISTAGE HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except share data)

(Unaudited)

Three and Nine Months Ended September 30, 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