Stonegate Capital Partners Updates Coverage on NCS Multistage Holdings Following Strong Q3 2025 Performance

Stonegate Capital Partners has updated its coverage of NCS Multistage Holdings, Inc. (NASDAQ: NCSM) following the company's third-quarter 2025 financial results. NCSM reported total revenues of $46.5 million, representing a 6.0% year-over-year increase that outperformed broader industry activity levels. This growth was primarily driven by higher U.S. and international product sales, particularly in fracturing systems including the North Sea region and wellbore construction activities in the Middle East.

The company demonstrated particularly strong performance in international markets, with international revenue increasing approximately 38.0% year-over-year while U.S. revenue grew by approximately 36.0% during the same period. This international expansion was partially offset by softer Canadian product sales due to lower rig counts, though Canada still managed 32% sequential growth as spring break-up effects eased. Adjusted gross margins came in at 41.7%, showing only a slight decrease from 42.1% in the third quarter of 2024.

NCSM reported gross profit of $19.4 million and adjusted EBITDA of $7.0 million for the quarter, with earnings per share of $1.47 compared to $1.67 in the same quarter last year. The company ended the quarter with a strong liquidity position, reporting $25.3 million in cash and an additional $19.4 million available under its undrawn revolving credit facility, resulting in total liquidity of $44.7 million. This compares favorably to total debt of only $7.4 million, consisting entirely of finance lease obligations.

The company's free cash flow less distributions to non-controlling interest showed significant improvement, reaching $6.8 million as of third quarter 2025 compared to just $0.35 million in the prior year period. This improvement reflects enhanced operating cash generation and disciplined investment strategies. Net working capital stood at $63.0 million, an increase of 12.6% from $56.4 million at year-end 2024, driven by higher accounts receivable and inventory.

A key development during the quarter was the successful integration of ResMetrics, which NCSM acquired in late July 2025. Early results from the acquisition were visible in third-quarter performance, with diagnostics services in the U.S. benefiting by approximately $2.0 million from ResMetrics. The integration is progressing ahead of plan, combining ResMetrics' chemical tracer lab capabilities and PetroXY web portal with NCS's existing tracer portfolio and international footprint, particularly in the Middle East and North Sea regions.

Looking forward, management provided guidance for fourth quarter 2025 revenue of $41-45 million, adjusted gross margin of 40-42%, and adjusted EBITDA of $5.0-6.5 million. For full-year 2025, the company forecasts revenue of $174-178 million and adjusted EBITDA of $22.5-24.0 million, along with free cash flow less distributions to non-controlling interest of $11-13 million and gross capital expenditures of $1.3-1.5 million.

Stonegate Capital Partners' valuation analysis utilizes both discounted cash flow and EV/EBITDA comparable analysis. The DCF analysis produces a valuation range of $48.26 to $56.97 with a midpoint of $52.05, while the EV/EBITDA valuation results in a range of $46.61 to $56.91 with a midpoint of $51.76. The firm continues to expect modest revenue and margin growth through the remainder of fiscal year 2025, supported by resilience in core product lines and contributions from the ResMetrics acquisition.