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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, 2025

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 April 29, 2025, there were 2,540,849 shares of common stock outstanding.

Table of Contents

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 | 5
| Condensed Consolidated Statements of Stockholders’ Equity | 6
| Condensed Consolidated Statements of Cash Flows | 7
| Notes to Unaudited Condensed Consolidated Financial Statements | 8
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 18
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 29
Item 4. | Controls and Procedures | 29
PART II. OTHER INFORMATION
Item 1. | Legal Proceedings | 30
Item 1A. | Risk Factors | 30
Item 5. | Other Information | 30
Item 6. | Exhibits | 31
Signatures |  | 32

2

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, |
|  | 2025 |  |  | 2024 |
Assets |  |  |  |  |  |  |  |
Current assets |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 22,997 |  |  | $ | 25,880 |
Accounts receivable—trade, net |  |  | 38,403 |  |  |  | 31,513 |
Inventories, net |  |  | 40,756 |  |  |  | 40,971 |
Prepaid expenses and other current assets |  |  | 1,852 |  |  |  | 2,063 |
Other current receivables |  |  | 5,033 |  |  |  | 5,143 |
Total current assets |  |  | 109,041 |  |  |  | 105,570 |
Noncurrent assets |  |  |  |  |  |  |  |
Property and equipment, net |  |  | 20,477 |  |  |  | 21,283 |
Goodwill |  |  | 15,222 |  |  |  | 15,222 |
Identifiable intangibles, net |  |  | 3,523 |  |  |  | 3,690 |
Operating lease assets |  |  | 5,773 |  |  |  | 5,911 |
Deposits and other assets |  |  | 660 |  |  |  | 712 |
Deferred income taxes, net |  |  | 422 |  |  |  | 424 |
Total noncurrent assets |  |  | 46,077 |  |  |  | 47,242 |
Total assets |  | $ | 155,118 |  |  | $ | 152,812 |
Liabilities and Stockholders’ Equity |  |  |  |  |  |  |  |
Current liabilities |  |  |  |  |  |  |  |
Accounts payable—trade |  | $ | 11,751 |  |  | $ | 8,970 |
Accrued expenses |  |  | 5,348 |  |  |  | 8,351 |
Income taxes payable |  |  | 1,103 |  |  |  | 683 |
Operating lease liabilities |  |  | 1,676 |  |  |  | 1,602 |
Current maturities of long-term debt |  |  | 2,250 |  |  |  | 2,141 |
Other current liabilities |  |  | 1,737 |  |  |  | 3,672 |
Total current liabilities |  |  | 23,865 |  |  |  | 25,419 |
Noncurrent liabilities |  |  |  |  |  |  |  |
Long-term debt, less current maturities |  |  | 5,370 |  |  |  | 6,001 |
Operating lease liabilities, long-term |  |  | 4,662 |  |  |  | 4,891 |
Other long-term liabilities |  |  | 207 |  |  |  | 206 |
Deferred income taxes, net |  |  | 178 |  |  |  | 186 |
Total noncurrent liabilities |  |  | 10,417 |  |  |  | 11,284 |
Total liabilities |  |  | 34,282 |  |  |  | 36,703 |
Commitments and contingencies (Note 10) |  |  |  |  |  |  |  |
Stockholders’ equity |  |  |  |  |  |  |  |
Preferred stock, $0.01 par value, 10,000,000 shares authorized, no shares issued and outstanding at March 31, 2025 and December 31, 2024 |  |  | — |  |  |  | — |
Common stock, $0.01 par value, 11,250,000 shares authorized, 2,607,362 shares issued and 2,540,849 shares outstanding at March 31, 2025 and 2,563,979 shares issued and 2,507,430 shares outstanding at December 31, 2024 |  |  | 26 |  |  |  | 26 |
Additional paid-in capital |  |  | 447,936 |  |  |  | 447,384 |
Accumulated other comprehensive loss |  |  | (87,615 | ) |  |  | (87,604 | )
Retained deficit |  |  | (254,968 | ) |  |  | (259,024 | )
Treasury stock, at cost, 66,513 shares at March 31, 2025 and 56,549 shares at December 31, 2024 |  |  | (2,211 | ) |  |  | (1,943 | )
Total stockholders' equity |  |  | 103,168 |  |  |  | 98,839 |
Non-controlling interest |  |  | 17,668 |  |  |  | 17,270 |
Total equity |  |  | 120,836 |  |  |  | 116,109 |
Total liabilities and stockholders' equity |  | $ | 155,118 |  |  | $ | 152,812 |

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

3

Table of Contents

NCS MULTISTAGE HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

|  | Three Months Ended |
|  | March 31, |
|  | 2025 |  |  | 2024 |
Revenues |  |  |  |  |  |  |  |
Product sales |  | $ | 35,066 |  |  | $ | 31,758 |
Services |  |  | 14,939 |  |  |  | 12,100 |
Total revenues |  |  | 50,005 |  |  |  | 43,858 |
Cost of sales |  |  |  |  |  |  |  |
Cost of product sales, exclusive of depreciation and amortization expense shown below |  |  | 20,352 |  |  |  | 19,692 |
Cost of services, exclusive of depreciation and amortization expense shown below |  |  | 7,798 |  |  |  | 6,595 |
Total cost of sales, exclusive of depreciation and amortization expense shown below |  |  | 28,150 |  |  |  | 26,287 |
Selling, general and administrative expenses |  |  | 16,195 |  |  |  | 13,830 |
Depreciation |  |  | 1,204 |  |  |  | 1,073 |
Amortization |  |  | 167 |  |  |  | 167 |
Income from operations |  |  | 4,289 |  |  |  | 2,501 |
Other income (expense) |  |  |  |  |  |  |  |
Interest expense, net |  |  | (42 | ) |  |  | (100 | )
Other income, net |  |  | 883 |  |  |  | 1,137 |
Foreign currency exchange loss, net |  |  | (3 | ) |  |  | (498 | )
Total other income |  |  | 838 |  |  |  | 539 |
Income before income tax |  |  | 5,127 |  |  |  | 3,040 |
Income tax expense |  |  | 673 |  |  |  | 487 |
Net income |  |  | 4,454 |  |  |  | 2,553 |
Net income attributable to non-controlling interest |  |  | 398 |  |  |  | 483 |
Net income attributable to NCS Multistage Holdings, Inc. |  | $ | 4,056 |  |  | $ | 2,070 |
Earnings per common share |  |  |  |  |  |  |  |
Basic earnings per common share attributable to NCS Multistage Holdings, Inc. |  | $ | 1.58 |  |  | $ | 0.83 |
Diluted earnings per common share attributable to NCS Multistage Holdings, Inc. |  | $ | 1.51 |  |  | $ | 0.82 |
Weighted average common shares outstanding |  |  |  |  |  |  |  |
Basic |  |  | 2,568 |  |  |  | 2,508 |
Diluted |  |  | 2,686 |  |  |  | 2,539 |

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

4

Table of Contents

NCS MULTISTAGE HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)

|  | Three Months Ended |
|  | March 31, |
|  | 2025 |  |  | 2024 |
Net income |  | $ | 4,454 |  |  | $ | 2,553 |
Foreign currency translation adjustments, net of tax of $0 |  |  | (11 | ) |  |  | (496 | )
Comprehensive income |  |  | 4,443 |  |  |  | 2,057 |
Less: Comprehensive income attributable to non-controlling interest |  |  | 398 |  |  |  | 483 |
Comprehensive income attributable to NCS Multistage Holdings, Inc. |  | $ | 4,045 |  |  | $ | 1,574 |

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

5

Table of Contents

NCS MULTISTAGE HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except share data)

(Unaudited)

|  | Three Months Ended March 31, 2025 |
|  | 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, 2024 |  |  | — |  |  | $ | — |  |  |  | 2,563,979 |  |  | $ | 26 |  |  | $ | 447,384 |  |  | $ | (87,604 | ) |  | $ | (259,024 | ) |  |  | (56,549 | ) |  | $ | (1,943 | ) |  | $ | 17,270 |  |  | $ | 116,109 |
Share-based compensation |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 552 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 552 |
Net income |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 4,056 |  |  |  | — |  |  |  | — |  |  |  | 398 |  |  |  | 4,454 |
Vesting of restricted stock |  |  | — |  |  |  | — |  |  |  | 43,383 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Shares withheld |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (9,964 | ) |  |  | (268 | ) |  |  | — |  |  |  | (268 | )
Currency translation adjustment |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (11 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (11 | )
Balances as of March 31, 2025 |  |  | — |  |  | $ | — |  |  |  | 2,607,362 |  |  | $ | 26 |  |  | $ | 447,936 |  |  | $ | (87,615 | ) |  | $ | (254,968 | ) |  |  | (66,513 | ) |  | $ | (2,211 | ) |  | $ | 17,668 |  |  | $ | 120,836 |

|  | Three Months Ended March 31, 2024 |
|  | 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, 2023 |  |  | — |  |  | $ | — |  |  |  | 2,482,796 |  |  | $ | 25 |  |  | $ | 444,638 |  |  | $ | (85,752 | ) |  | $ | (265,617 | ) |  |  | (39,052 | ) |  | $ | (1,676 | ) |  | $ | 17,775 |  |  | $ | 109,393 |
Share-based compensation |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 766 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 766 |
Net income |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2,070 |  |  |  | — |  |  |  | — |  |  |  | 483 |  |  |  | 2,553 |
Distribution to noncontrolling interest |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (500 | ) |  |  | (500 | )
Vesting of restricted stock |  |  | — |  |  |  | — |  |  |  | 57,830 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Shares withheld |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (15,866 | ) |  |  | (237 | ) |  |  | — |  |  |  | (237 | )
Currency translation adjustment |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (496 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (496 | )
Balances as of March 31, 2024 |  |  | — |  |  | $ | — |  |  |  | 2,540,626 |  |  | $ | 25 |  |  | $ | 445,404 |  |  | $ | (86,248 | ) |  | $ | (263,547 | ) |  |  | (54,918 | ) |  | $ | (1,913 | ) |  | $ | 17,758 |  |  | $ | 111,479 |

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

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NCS MULTISTAGE HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

|  | Three Months Ended |
|  | March 31, |
|  | 2025 |  |  | 2024 |
Cash flows from operating activities |  |  |  |  |  |  |  |
Net income |  | $ | 4,454 |  |  | $ | 2,553 |
Adjustments to reconcile net income to net cash used in operating activities: |  |  |  |  |  |  |  |
Depreciation and amortization |  |  | 1,371 |  |  |  | 1,240 |
Amortization of deferred loan costs |  |  | 52 |  |  |  | 51 |
Share-based compensation |  |  | 1,445 |  |  |  | 902 |
Provision for inventory obsolescence |  |  | (35 | ) |  |  | 316 |
Deferred income tax expense |  |  | 1 |  |  |  | 5 |
Gain on sale of property and equipment |  |  | (36 | ) |  |  | (172 | )
Provision for credit losses |  |  | 42 |  |  |  | — |
Net foreign currency unrealized loss (gain) |  |  | (849 | ) |  |  | 373 |
Proceeds from note receivable |  |  | — |  |  |  | 61 |
Changes in operating assets and liabilities: |  |  |  |  |  |  |  |
Accounts receivable—trade |  |  | (6,978 | ) |  |  | (10,282 | )
Inventories, net |  |  | 200 |  |  |  | 1,521 |
Prepaid expenses and other assets |  |  | 890 |  |  |  | 29 |
Accounts payable—trade |  |  | 3,742 |  |  |  | 2,355 |
Accrued expenses |  |  | (3,003 | ) |  |  | 130 |
Other liabilities |  |  | (3,273 | ) |  |  | (1,339 | )
Income taxes receivable/payable |  |  | 332 |  |  |  | 377 |
Net cash used in operating activities |  |  | (1,645 | ) |  |  | (1,880 | )
Cash flows from investing activities |  |  |  |  |  |  |  |
Purchases of property and equipment |  |  | (464 | ) |  |  | (299 | )
Purchase and development of software and technology |  |  | — |  |  |  | (13 | )
Proceeds from sales of property and equipment |  |  | 13 |  |  |  | 176 |
Net cash used in investing activities |  |  | (451 | ) |  |  | (136 | )
Cash flows from financing activities |  |  |  |  |  |  |  |
Payments on finance leases |  |  | (522 | ) |  |  | (449 | )
Line of credit borrowings |  |  | 1,963 |  |  |  | 1,158 |
Payments of line of credit borrowings |  |  | (1,963 | ) |  |  | (602 | )
Treasury shares withheld |  |  | (268 | ) |  |  | (237 | )
Distribution to noncontrolling interest |  |  | — |  |  |  | (500 | )
Net cash used in financing activities |  |  | (790 | ) |  |  | (630 | )
Effect of exchange rate changes on cash and cash equivalents |  |  | 3 |  |  |  | (70 | )
Net change in cash and cash equivalents |  |  | (2,883 | ) |  |  | (2,716 | )
Cash and cash equivalents beginning of period |  |  | 25,880 |  |  |  | 16,720 |
Cash and cash equivalents end of period |  | $ | 22,997 |  |  | $ | 14,004 |
Noncash investing and financing activities |  |  |  |  |  |  |  |
Assets obtained in exchange for new finance lease liabilities |  | $ | — |  |  | $ | 696 |
Assets obtained in exchange for new operating lease liabilities |  | $ | 244 |  |  | $ | — |

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

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NCS MULTISTAGE HOLDINGS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Basis of Presentation

Nature of Business

NCS Multistage Holdings, Inc., a Delaware corporation, through its wholly owned subsidiaries and subsidiaries for which it has a controlling voting interest (collectively referred to as the “Company,” “NCS,” “we,” “our” and “us”), is primarily engaged in providing engineered products and support services for oil and natural gas well construction, well completions and field development strategies. We offer our products and services primarily to exploration and production (“E&P”) companies for use both in onshore and offshore wells. We operate through service facilities principally located in Houston and Odessa, Texas; Tulsa and Oklahoma City, Oklahoma; Calgary, Red Deer, Grande Prairie and Estevan, Canada; Neuquén, Argentina and Stavanger, Norway.

Basis of Presentation

Our accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X of the Securities Exchange Act of 1934, as amended, issued by the Securities Exchange Commission (“SEC”) and have not been audited by our independent registered public accounting firm. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with our financial statements and related notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2024 (“Annual Report”). We consolidate Repeat Precision, LLC and its subsidiary (“Repeat Precision”), an entity in which we own a 50% interest and have a controlling voting interest, operating in the United States and Mexico. The other party’s 50% ownership interest is presented separately as a non-controlling interest. In the opinion of management, these condensed consolidated financial statements reflect all normal, recurring adjustments necessary for a fair statement of the interim periods presented. The results of operations for interim periods are not necessarily indicative of those for a full year. All intercompany accounts and transactions have been eliminated for purposes of preparing these condensed consolidated financial statements.

Significant Accounting Policies

Our significant accounting policies are described in “Note 2. Summary of Significant Accounting Policies” in our Annual Report.

Recent Accounting Pronouncements

In November 2024, the FASB issued ASU No. 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This ASU requires additional disclosure of certain costs and expenses within the notes to the financial statements. The new standard is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. We are currently evaluating the impact of the adoption of this guidance.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU improves income tax disclosures including a requirement to present specific categories in the effective tax rate reconciliation, additional information for reconciling items that meet a quantitative threshold, certain disclosures pertaining to income taxes paid (net of refunds received) and amendments to other disclosure requirements. The new standard is effective for annual periods beginning after December 15, 2024 and should be applied prospectively although retrospective application is permitted. Early adoption is permitted. We are currently evaluating the impact of the adoption of this guidance.

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NCS MULTISTAGE HOLDINGS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 2. Segment and Geographic Information

We sell complementary products and services largely to E&P customers in the oil and gas industry, through one reportable segment. See “Note 3. Segment and Geographic Information” to our consolidated financial statements of our Annual Report for a more detailed description. We manage our activities on a consolidated basis applying qualitative factors including the nature of the products and services, the nature and commonality of production processes, a shared customer base primarily in North America, the scope of geographic operations and a common industry and regulatory environment. Our chief operating decision maker (“CODM”) is the Chief Executive Officer.

We evaluate our performance on a consolidated basis by reviewing key income statement items such as revenue, gross margin, and net income, as well as other specific balance sheet and cash flow items; comparing certain key financial figures to financial guidance; and evaluating our share price performance and estimated trading multiple relative to selected peers.

Our CODM utilizes the GAAP measures of net income and cash flow from operations as primary measures of profitability and cash flow, respectively, as well as secondary non-GAAP measures of Adjusted EBITDA and free cash flow. The CODM assesses segment performance using these measures, and he decides how to allocate resources, which may include evaluating the budget, current forecast and our consolidated cash position, with periodic review of our market share and our common stock performance relative to peers. The CODM assesses business performance consistent with the presentation on our consolidated financial statements, supplemented with a review of certain significant selling, general and administrative (“SG&A”) expense categories.

The following table summarizes significant SG&A expenses that are not separately presented on our consolidated statements of operations (in thousands):

|  | Three Months Ended |
|  | March 31, |
|  | 2025 |  |  | 2024 |
Payroll and employee benefits |  | $ | 9,952 |  |  | $ | 8,595 |
Share-based compensation |  |  | 1,445 |  |  |  | 902 |
Professional services |  |  | 2,202 |  |  |  | 1,727 |
Insurance |  |  | 491 |  |  |  | 524 |
Software and hardware |  |  | 575 |  |  |  | 511 |
Other |  |  | 1,530 |  |  |  | 1,571 |
Total SG&A |  |  | 16,195 |  |  |  | 13,830 |

The following table summarizes revenue by geographic area attributed based on the current billing address of the customer (in thousands):

|  | Three Months Ended |
|  | March 31, |
|  | 2025 |  |  | 2024 |
United States |  |  |  |  |  |  |  |
Product sales |  | $ | 6,867 |  |  | $ | 7,767 |
Services |  |  | 2,505 |  |  |  | 2,244 |
Total United States |  |  | 9,372 |  |  |  | 10,011 |
Canada |  |  |  |  |  |  |  |
Product sales |  |  | 26,843 |  |  |  | 22,675 |
Services |  |  | 10,875 |  |  |  | 8,994 |
Total Canada |  |  | 37,718 |  |  |  | 31,669 |
Other Countries |  |  |  |  |  |  |  |
Product sales |  |  | 1,356 |  |  |  | 1,316 |
Services |  |  | 1,559 |  |  |  | 862 |
Total other countries |  |  | 2,915 |  |  |  | 2,178 |
Total |  |  |  |  |  |  |  |
Product sales |  |  | 35,066 |  |  |  | 31,758 |
Services |  |  | 14,939 |  |  |  | 12,100 |
Total revenues |  | $ | 50,005 |  |  | $ | 43,858 |

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NCS MULTISTAGE HOLDINGS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes long-lived assets (defined as property and equipment, net and operating lease assets) by geographic area (in thousands):

|  | March 31, |  |  | December 31, |
|  | 2025 |  |  | 2024 |
United States |  | $ | 12,715 |  |  | $ | 13,455 |
Canada |  |  | 9,850 |  |  |  | 10,240 |
Other Countries |  |  | 3,685 |  |  |  | 3,499 |
Total |  | $ | 26,250 |  |  | $ | 27,194 |

Note 3. Revenues

Disaggregation of Revenue

We sell our products and services primarily in North America and in selected international markets. See above "Note 2. Segment and Geographic Information" for our disaggregated revenue by geographic area.

Contract Balances

If the timing of the delivery of products and provision of services is different from the timing of the customer payments, we recognize either a contract asset (performance precedes contractual due date in connection with estimates of variable consideration) or a contract liability (customer payment precedes performance) on our condensed consolidated balance sheet.

The following table presents the current contract liabilities as of March 31, 2025 and December 31, 2024 (in thousands):

Balance at December 31, 2024 |  | $ | 223 |
Additions |  |  | 186 |
Revenue recognized |  |  | — |
Balance at March 31, 2025 |  | $ | 409 |

We currently do not have any contract assets or non-current contract liabilities. Our contract liability as of March 31, 2025 and December 31, 2024 is included in other current liabilities on the applicable condensed consolidated balance sheets. Our performance obligations for our product and services revenues are typically satisfied before the customer’s payment; however, prepayments may occasionally be required. No revenue was recognized from the contract liability balance for the three months ended March 31, 2025. There was $0.3 million in revenue recognized from the contract liability balance for the three months ended March 31, 2024.

Practical Expedient

We do not disclose the value of unsatisfied performance obligations when the related contract has a duration of one year or less. We recognize revenue equal to what we have the right to invoice when that amount corresponds directly with the value to the customer of our performance to date.

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NCS MULTISTAGE HOLDINGS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 4. Inventories, net

Inventories consist of the following as of March 31, 2025 and December 31, 2024 (in thousands):

|  | March 31, |  |  | December 31, |
|  | 2025 |  |  | 2024 |
Raw materials |  | $ | 1,983 |  |  | $ | 2,085 |
Work in process |  |  | 268 |  |  |  | 291 |
Finished goods |  |  | 38,505 |  |  |  | 38,595 |
Total inventories, net |  | $ | 40,756 |  |  | $ | 40,971 |

Note 5. Other Current Receivables

Other current receivables consist of the following as of March 31, 2025 and December 31, 2024 (in thousands):

|  | March 31, |  |  | December 31, |
|  | 2025 |  |  | 2024 |
Current income tax receivables |  | $ | 1,828 |  |  | $ | 1,743 |
Employee receivables |  |  | 154 |  |  |  | 165 |
Other receivables |  |  | 3,051 |  |  |  | 3,235 |
Total other current receivables |  | $ | 5,033 |  |  | $ | 5,143 |

Other receivables as of March 31, 2025 and December 31, 2024, included the following: (i) a receivable of $1.0 million and $1.1 million, respectively, associated with royalty agreements, for amounts deemed probable and estimable, but not yet received as of the balance sheet date, and (ii) a receivable of $1.4 million, net of withholding tax, associated with a technical services and assistance agreement with our local partner in Oman, pursuant to a collaborative arrangement that ended in November 2024. We expect to collect the receivable from our Omani partner during the second quarter, which is consistent with the timing of receipt in the prior year.

Note 6. Property and Equipment

Property and equipment by major asset class consist of the following as of March 31, 2025 and December 31, 2024 (in thousands):

|  | March 31, |  |  | December 31, |
|  | 2025 |  |  | 2024 |
Land |  | $ | 1,501 |  |  | $ | 1,501 |
Building and improvements |  |  | 6,687 |  |  |  | 6,792 |
Machinery and equipment |  |  | 20,092 |  |  |  | 19,769 |
Computers and software |  |  | 2,176 |  |  |  | 2,175 |
Furniture and fixtures |  |  | 466 |  |  |  | 460 |
Vehicles |  |  | 130 |  |  |  | 128 |
Right of use assets - finance leases |  |  | 13,607 |  |  |  | 13,751 |
|  |  | 44,659 |  |  |  | 44,576 |
Less: Accumulated depreciation and amortization |  |  | (24,302 | ) |  |  | (23,519 | )
|  |  | 20,357 |  |  |  | 21,057 |
Construction in progress |  |  | 120 |  |  |  | 226 |
Property and equipment, net |  | $ | 20,477 |  |  | $ | 21,283 |

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NCS MULTISTAGE HOLDINGS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table presents the depreciation expense associated with the respective income statement line items for the three months ended March 31, 2025 and 2024 (in thousands):

|  | Three Months Ended |
|  | March 31, |
|  | 2025 |  |  | 2024 |
Cost of sales |  |  |  |  |  |  |  |
Cost of product sales |  | $ | 503 |  |  | $ | 468 |
Cost of services |  |  | 212 |  |  |  | 148 |
Selling, general and administrative expenses |  |  | 489 |  |  |  | 457 |
Total depreciation |  | $ | 1,204 |  |  | $ | 1,073 |

We evaluate our property and equipment for impairment whenever changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. We determined there were no triggering events that indicated potential impairment of our property and equipment for the three months ended March 31, 2025 and 2024, and accordingly no impairment loss has been recorded.

Note 7. Goodwill and Identifiable Intangibles

The carrying amount of goodwill is summarized as follows (in thousands):

|  | March 31, |  |  | December 31, |
|  | 2025 |  |  | 2024 |
Gross value |  | $ | 177,162 |  |  | $ | 177,162 |
Accumulated impairment |  |  | (161,940 | ) |  |  | (161,940 | )
Net |  | $ | 15,222 |  |  | $ | 15,222 |

We perform an annual impairment analysis of goodwill as of December 31, or whenever there is a triggering event that indicates an impairment loss may have been incurred. As of March 31, 2025 and 2024, we did not identify any triggering events that would indicate potential impairment for Repeat Precision, our only reportable unit with goodwill. Therefore, no goodwill impairment has been recorded for the three months ended March 31, 2025 and 2024.

Identifiable intangibles by major asset class consist of the following (in thousands):

|  |  | March 31, 2025 |
| Estimated |  | Gross |  |  |  |  |  |  |  |  |
| Useful |  | Carrying |  |  | Accumulated |  |  | Net |
| Lives (Years) |  | Amount |  |  | Amortization |  |  | Balance |
Technology | 1 - 20 |  | $ | 3,958 |  |  | $ | (1,186 | ) |  | $ | 2,772 |
Customer relationships | 10 |  |  | 4,100 |  |  |  | (3,349 | ) |  |  | 751 |
Total identifiable intangibles |  | $ | 8,058 |  |  | $ | (4,535 | ) |  | $ | 3,523 |

|  |  | December 31, 2024 |
| Estimated |  | Gross |  |  |  |  |  |  |  |  |
| Useful |  | Carrying |  |  | Accumulated |  |  | Net |
| Lives (Years) |  | Amount |  |  | Amortization |  |  | Balance |
Technology | 1 - 20 |  | $ | 3,958 |  |  | $ | (1,122 | ) |  | $ | 2,836 |
Customer relationships | 10 |  |  | 4,100 |  |  |  | (3,246 | ) |  |  | 854 |
Total identifiable intangibles |  | $ | 8,058 |  |  | $ | (4,368 | ) |  | $ | 3,690 |

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NCS MULTISTAGE HOLDINGS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Total amortization expense, which is associated with SG&A expenses on the condensed consolidated statements of operations, was $0.2 million for each of the three months ended March 31, 2025 and 2024.

Identifiable intangibles are tested for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. As of March 31, 2025 and 2024, we evaluated potential triggering events and determined that there were no triggering events which indicated potential impairment of our intangibles, which are substantially related to our Repeat Precision asset group. Therefore, we did not record any impairment charges related to our identifiable intangibles for the three months ended March 31, 2025 and 2024.

Note 8. Accrued Expenses

Accrued expenses consist of the following as of March 31, 2025 and December 31, 2024 (in thousands):

|  | March 31, |  |  | December 31, |
|  | 2025 |  |  | 2024 |
Accrued payroll and bonus |  | $ | 3,966 |  |  | $ | 7,601 |
Property and franchise taxes accrual |  |  | 336 |  |  |  | 251 |
Accrued other miscellaneous liabilities |  |  | 1,046 |  |  |  | 499 |
Total accrued expenses |  | $ | 5,348 |  |  | $ | 8,351 |

Accrued payroll and bonus includes the incentive bonus accrual based on operating performance. Of this amount, for the year ended December 31, 2024, we paid approximately $6.0 million during the first quarter of 2025.

Note 9. Debt

Our long-term debt consists of the following as of March 31, 2025 and December 31, 2024 (in thousands):

|  | March 31, |  |  | December 31, |
|  | 2025 |  |  | 2024 |
ABL Facility |  | $ | — |  |  | $ | — |
Repeat Precision Promissory Note |  |  | — |  |  |  | — |
Finance leases |  |  | 7,620 |  |  |  | 8,142 |
Total debt |  |  | 7,620 |  |  |  | 8,142 |
Less: current portion |  |  | (2,250 | ) |  |  | (2,141 | )
Long-term debt |  | $ | 5,370 |  |  | $ | 6,001 |

The estimated fair value of total debt as of March 31, 2025 and December 31, 2024 was $6.7 million and $7.2 million, respectively. The fair value of the finance leases was estimated using Level 2 inputs by calculating the sum of the discounted future interest and principal payments at our incremental borrowing rate through the date of maturity.

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NCS MULTISTAGE HOLDINGS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Below is a description of our financing arrangements.

ABL Facility

In May 2022, we entered into a secured asset-based revolving credit facility (the “ABL Facility”), where credit availability is subject to a borrowing base calculation. The ABL Facility is governed by the Credit Agreement dated as of May 3, 2022, by and between NCS Multistage Holdings, Inc. (“NCSH”), Pioneer Investment, Inc., NCS Multistage, LLC, NCS Multistage Inc., the other loan parties thereto, the lenders party thereto, and JPMorgan Chase Bank, N.A., as administrative agent and as a lender under the facility provided therein (the “Credit Agreement”). In April 2024, we amended the Credit Agreement to modify the benchmark that may be used for loans in Canadian dollars in connection with the cessation of the CDOR Rate and transition to the CORRA Rate.

The ABL Facility is a revolving credit facility with an aggregate principal amount of $35.0 million, of which borrowing up to $10.0 million can be made in Canadian dollars and funding of $7.5 million can be available for letters of credit. Total borrowings available under the ABL Facility may be limited subject to a borrowing base calculated on the eligible accounts receivables and eligible inventory, provided such eligible balances cannot include the assets of Repeat Precision. Our available borrowing base under the ABL Facility as of March 31, 2025 was $26.8 million. The ABL Facility will mature in May 2027. As of March 31, 2025 and December 31, 2024, we had no outstanding indebtedness under the ABL Facility.

Borrowings under the ABL Facility may be made in U.S. dollars with interest calculated using either the “ABR”, the “Adjusted Daily Simple SOFR” or the “Adjusted Term SOFR Rate”, and in Canadian dollars with interest calculated using the “Canadian Prime Rate” or the “Adjusted Term CORRA Rate” (each as defined in the amended and restated Credit Agreement). Borrowings bear interest plus a margin that varies depending on our leverage ratio as follows: (i) for ABR based loans, between 1.40% and 2.40%, and (ii) for Adjusted Daily Simple SOFR, Adjusted Term SOFR Rate, Canadian Prime Rate, and Adjusted Term CORRA Rate, between 2.40% and 3.40%. We must also pay a commitment fee calculated at 0.25% to 0.50% per annum, based on unused commitments. The applicable interest rate at March 31, 2025 was 6.8%. We incurred interest expense related to the ABL Facility, including commitment fees, of less than $0.1 million for each of the three months ended March 31, 2025 and 2024, respectively.

The obligations of the borrowers under the ABL Facility are guaranteed by NCSH and each of our U.S. and Canadian subsidiaries (other than Repeat Precision), as well as each of our future direct and indirect subsidiaries organized under the laws of the United States or Canada (subject to certain exceptions), and are secured by substantially all of the assets of NCSH and its subsidiaries, in each case, subject to certain exceptions and permitted liens.

The Credit Agreement requires, as a condition to borrowing, that available cash on hand after borrowings does not exceed $10.0 million. The Credit Agreement also requires us to (i) maintain, for quarters during which liquidity is less than 20% of the aggregate revolving commitments, a fixed charge coverage ratio of at least 1.0 to 1.0 and (ii) to prepay advances to the extent that the outstanding loans and letter of credit amounts exceed the most recently calculated borrowing base. As of March 31, 2025, we were in compliance with these financial covenants. The Credit Agreement also contains customary affirmative and negative covenants, including, among other things, restrictions on the creation of liens, the incurrence of indebtedness, investments, dividends and other restricted payments, dispositions and transactions with affiliates.

The Credit Agreement includes customary events of default for facilities of this type (with customary materiality thresholds and grace periods, as applicable). If an event of default occurs, the lenders party to the Credit Agreement may elect (after the expiration of any applicable notice or grace periods) to declare all outstanding borrowings under such facility, together with accrued and unpaid interest and other amounts payable thereunder, to be immediately due and payable. The lenders party to the Credit Agreement also have the right upon an event of default thereunder to terminate any commitments to provide further borrowings, or to provide additional financing in excess of the borrowing base limit, or to proceed against the collateral securing the ABL Facility.

We capitalized direct costs of $1.0 million in connection with the Credit Agreement, and less than $0.1 million associated with the April 2024 amendment, each of which is being amortized over the remaining term of the ABL Facility using the straight-line method. Amortization of the deferred financing charges of $0.1 million for each of the three months ended March 31, 2025 and 2024, respectively, was included in interest expense, net.

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NCS MULTISTAGE HOLDINGS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Repeat Precision Promissory Note

In February 2018, Repeat Precision entered into a promissory note with Security State Bank & Trust, Fredericksburg (the “Repeat Precision Promissory Note”). The Repeat Precision Promissory Note had been renewed annually several times. In May 2024, the Repeat Precision Promissory Note was again renewed with a reduced aggregate borrowing capacity of $2.5 million. The Repeat Precision Promissory Note is scheduled to mature in May 2025 and bears interest at a variable interest rate based on prime plus 1.00%. The applicable interest rate at March 31, 2025 was 8.5%. The Repeat Precision Promissory Note is collateralized by certain equipment, inventory and receivables of Repeat Precision. Total borrowings may be limited subject to a borrowing base calculation, which includes a portion of Repeat Precision’s eligible receivables, inventory and equipment. As of March 31, 2025 and December 31, 2024, there was no outstanding indebtedness under the promissory note. Repeat Precision’s indebtedness is guaranteed by Repeat Precision and its subsidiary and is not guaranteed by any other NCS entity.

Finance Leases

We lease assets under finance lease arrangements, including an office and laboratory in Tulsa, Oklahoma, facilities in Odessa, Texas, and certain operating equipment and software. We also maintain a vehicle leasing arrangement with a fleet management company through which we lease light vehicles and trucks that meet the finance lease criteria.

Note 10. Commitments and Contingencies

Litigation

In the ordinary course of our business, from time to time, we have various claims, lawsuits and administrative proceedings that are pending or threatened with respect to commercial, intellectual property and employee matters.

Canada Patent Matters

● In July 2018, we filed a patent infringement lawsuit seeking unspecified damages against Kobold Corporation, Kobold Completions Inc. and 2039974 Alberta Ltd. (“Kobold”) in the Federal Court of Canada (“Canada Court”), alleging that Kobold’s fracturing tools and methods infringe on several of our Canadian patents. In July 2019, Kobold filed a counterclaim seeking unspecified damages alleging that our fracturing tools and methods infringe on their patent. The patent infringement litigation against Kobold and their counterclaim was heard in early 2022.

In October 2023, the judge rendered a decision against us holding that our asserted patents are invalid and that we are infringing the Kobold asserted patent. The Canada Court ordered us to pay Kobold approximately $1.8 million in costs and disbursements, including taxes payable thereon, and granted an injunction prohibiting us from any further infringement of their patent. This amount was paid to Kobold in November 2023.

We believe that applicable law supports strong grounds to appeal the decision by the Canada Court. The appeal was heard in April 2025, and we expect a decision to be granted by late 2025 or early 2026. As we cannot predict with certainty the outcome of the appeal, we believe a loss is reasonably possible, but such a loss is not probable or reasonably estimable as of March 31, 2025. If we do not prevail in the appeal phase, the damages portion would then be decided by the Canada Court and we do not know what damages, if any, will be awarded to Kobold. The damages determination would likely extend for one or more years after the appeals decision. We would expect any damages awarded to be more modest because of the relative ease and minimal cost incurred to implement changes to our product to comply with the injunction, with such changes resulting in no significant commercial impact to date. In July 2024, Kobold filed a motion with the Canada Court regarding whether the injunction allowed us to modify our product or, as Kobold contends, we needed to destroy or deliver the product to Kobold. If the Canada Court agrees with Kobold, a fine or other remedy may be imposed against the Company.

● In April 2020, Kobold filed a separate patent infringement lawsuit seeking unspecified damages against us in the Canada Court, alleging that our fracturing tools infringe on their Canadian patents. In the summary judgment phase, we have successfully dismissed some of the asserted products. However, we were not able to dismiss all of the claims because there remained factual determinations that were not possible in a summary judgment proceeding for our other products. We believe we have strong arguments of invalidity and non-infringement in this matter. We expect the trial for this matter to be heard in late 2026.

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NCS MULTISTAGE HOLDINGS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Other Patent Matters

In connection with patent infringement claims regarding U.S. Patent No. 10,465,445 (“the ’445 Patent”), we received favorable jury verdicts against Nine Energy Services, Inc. (“Nine”) and TCO AS (“TCO”) in the Western District of Texas, Waco Division (“Waco District Court”). In January 2022, the jury awarded NCS approximately $0.5 million in damages against Nine, and in August 2022, the jury awarded NCS approximately $1.9 million in damages against TCO. At subsequent hearings in December 2022 and May 2024, respectively, the Waco District Court awarded supplemental damages, interest, and costs, and ordered both Nine and TCO to pay ongoing royalties for their sales of infringing casing flotation devices for the life of the '445 Patent. To date, Nine and TCO have secured over $6.0 million in total for the amounts owed in connection with the judgment. Both parties have appealed their respective decisions. Nine and TCO filed their respective opening appellate briefs in late 2024, and we filed our responses in early 2025. We expect a resolution to these matters in 2026. As the decisions are subject to appeal, we have not recorded any potential gain contingencies associated with these matters in the accompanying condensed consolidated statements of operations.

In accordance with GAAP, we accrue for contingencies where the occurrence of a material loss is probable and can be reasonably estimated. Our legal contingencies may increase or decrease, on a matter-by-matter basis, to account for future developments. Although the outcome of any legal proceeding cannot be predicted with any certainty, our assessment of the likely outcome of litigation matters is based on our judgment of a number of factors, including experience with similar matters, past history, precedents, relevant financial information and other evidence and facts specific to each matter.

Note 11. Share-Based Compensation

During the three months ended March 31, 2025, we granted 73,364 equity-classified restricted stock units (“RSUs”) with a weighted average grant date fair value of $24.54. We account for RSUs granted to employees at fair value, which we measure as the closing price of our common stock on the date of grant, and we recognize the compensation expense in the financial statements over the requisite service period. The RSUs granted to our employees generally vest over a period of three equal annual installments beginning on or around the anniversary of the date of grant. The RSUs granted to the nonemployee members of our Board of Directors generally vest on the one-year anniversary of the grant date and either settle at vesting or, if the director has elected to defer the RSUs, within thirty days following the earlier of the termination of the director’s service for any reason or a change of control.

During the three months ended March 31, 2025, we granted 47,330 equivalent stock units, or cash-settled, liability-classified RSUs (“ESUs”), with a weighted average grant date fair value of $24.54. ESUs are granted to employees at fair value, which we measure at the closing price of our common stock on the date of grant. Since ESUs are settled in cash, we record a liability, which is remeasured each reporting period at fair value based upon the closing price of our common stock until the awards are settled. The ESUs granted to our employees generally vest and settle over a period of three equal annual installments beginning on or around the anniversary of the date of grant. The cash settled for any ESU will not exceed the maximum payout established by our Compensation, Nominating and Governance Committee of the Board of Directors.

In addition, during the three months ended March 31, 2025, we granted 32,507 performance stock unit awards (“PSUs”), which have a performance period from January 1, 2025 to December 31, 2027. The PSUs grant date fair value of $24.29 was measured using a Monte Carlo simulation. The number of PSUs ultimately issued is dependent upon our total shareholder return relative to a performance peer group (“relative TSR”) over a three-year performance period. Each PSU associated with the March 2025 award will settle for between zero and 1.25 shares of our common stock in the first quarter of 2028. The threshold performance level (25th percentile relative TSR) earns 50% of the target PSUs, the mid-point performance level (50th percentile relative TSR) earns 100% of the target PSUs and the maximum performance level (75th percentile relative TSR) or greater earns 125% of the target PSUs.

Total share-based compensation expense for all awards was $1.4 million and $0.9 million for the three months ended March 31, 2025 and 2024, respectively.

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NCS MULTISTAGE HOLDINGS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 12. Income Taxes

The computation of the annual estimated effective tax rate at each interim period requires certain estimates and assumptions including, but not limited to, the expected operating income (or loss) for the year, projections of the proportion of income (or loss) earned and taxed in foreign jurisdictions, permanent and temporary differences and the likelihood of recovering deferred tax assets generated in the current year. The accounting estimates used to compute the provision for income taxes may change as new events occur, more experience is acquired, or additional information is obtained. The computation of the annual estimated effective tax rate includes applicable modifications, which were projected for the year, such as certain book expenses not deductible for tax, tax credits and foreign deemed dividends.

Our effective tax rate (“ETR”) from continuing operations was 13.1% and 16.0% for the three months ended March 31, 2025 and 2024, respectively. The income tax expense for the three months ended March 31, 2025 and 2024, respectively, primarily relates to results generated by our businesses in the United States, Canada, and certain other foreign jurisdictions. The income tax provision for each of the three months ended March 31, 2025 and 2024 does not include the effects of losses within the United States, Canada, or other jurisdictions, if any, from which we cannot currently benefit. In addition, for each of the three months ended March 31, 2025 and 2024, the income tax provision includes effects of changes in valuation allowances established against our previously recognized deferred tax assets derived from net operating loss carryforwards, in the United States, Canada, or other jurisdictions. For each of the three-month periods ended March 31, 2025 and 2024, due to the impact of the valuation allowances on tax expense, significant variations exist in the customary relationship between income tax expense and pretax accounting income.

Note 13. Earnings Per Common Share

The following table presents the reconciliation of the numerator and denominator for calculating earnings per common share (in thousands, except per share data):

|  | Three Months Ended |
|  | March 31, |
|  | 2025 |  |  | 2024 |
Numerator |  |  |  |  |  |  |  |
Net income |  | $ | 4,454 |  |  | $ | 2,553 |
Less: income attributable to non-controlling interest |  |  | 398 |  |  |  | 483 |
Net income attributable to NCS Multistage Holdings, Inc. |  | $ | 4,056 |  |  | $ | 2,070 |
Denominator |  |  |  |  |  |  |  |
Basic weighted average number of shares |  |  | 2,568 |  |  |  | 2,508 |
Dilutive effect of other equity awards |  |  | 118 |  |  |  | 31 |
Diluted weighted average number of shares |  |  | 2,686 |  |  |  | 2,539 |
Earnings per common share |  |  |  |  |  |  |  |
Basic |  | $ | 1.58 |  |  | $ | 0.83 |
Diluted |  | $ | 1.51 |  |  | $ | 0.82 |
Potentially dilutive securities excluded as anti-dilutive |  |  | 2 |  |  |  | 74 |

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

The following discussion and analysis of our financial condition and results of operations should be read together with our financial statements and the related notes thereto included in this Quarterly Report on Form 10-Q (“Quarterly Report”) and with our audited financial statements and the related notes thereto included in our Annual Report on Form 10-K (“Annual Report”), filed with the Securities and Exchange Commission (the “SEC”). This discussion and analysis contains forward-looking statements regarding the industry outlook, estimates and assumptions concerning events and financial and industry trends that may affect our future results of operations or financial condition and other non-historical statements. These forward-looking statements are subject to numerous risks and uncertainties, including but not limited to the risks and uncertainties described in “—Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors.” Our actual results may differ materially from those contained in or implied by these forward-looking statements. As used in this Quarterly Report, except where the context otherwise requires or where otherwise indicated, the terms “Company,” “NCS,” “we,” “our” and “us” refer to NCS Multistage Holdings, Inc.

Overview and Outlook

We are a leading provider of highly engineered products and support services that facilitate the optimization of oil and natural gas well construction, well completions and field development strategies. We provide our products and services primarily to exploration and production (“E&P”) companies for use in onshore and offshore wells, predominantly wells that have been drilled with horizontal laterals in both unconventional and conventional oil and natural gas formations. Our products and services are utilized in oil and natural gas basins throughout North America and in selected international markets, including the North Sea, the Middle East, Argentina and China. We provide our products and services to various customers, including leading large independent oil and natural gas companies and major oil companies.

Our primary offering is our fracturing systems products and services, which enable efficient pinpoint stimulation: the process of individually stimulating each entry point into a formation targeted by an oil or natural gas well. Our fracturing systems products and services can be used in both cemented and open-hole wellbores and enable our customers to precisely place stimulation treatments in a more controlled and repeatable manner as compared with traditional completion techniques. Our fracturing systems products and services are utilized in conjunction with third-party providers of pressure pumping, coiled tubing and other services. As an extension of fracturing systems, we offer enhanced recovery systems, which enable our customers to inject water, other fluids, or gases in a controlled manner with the objective of increasing the amount of hydrocarbons produced from their assets.

We own a 50% interest in Repeat Precision, LLC (“Repeat Precision”), which sells composite and dissolvable frac plugs, setting tools, perforating guns and related products. We provide tracer diagnostics services for well completion and reservoir characterization that utilize downhole chemical and radioactive tracers. We sell products for well construction, including casing buoyancy systems, liner hanger systems and toe initiation sleeves. We operate in one reportable segment that has been identified based on how our chief operating decision maker manages our business.

Our products and services are primarily sold to North American E&P companies and our ability to generate revenues from our products and services depends upon oil and natural gas drilling and completion activity in North America. Oil and natural gas drilling and completion activity is directly influenced by oil and natural gas prices.

Based on year-to-date E&P company drilling and completion activity, projected capital budgets for the remainder of 2025, and recent industry reports, we believe: (i) activity in Canada will remain stable compared to 2024; (ii) the U.S. market will experience a modest decline in activity, driven by conservative oil production growth targets and ongoing consolidation within the E&P sector; and (iii) activity and spending in international markets may increase in the markets where NCS participates, including the North Sea, the Middle East, and Argentina, despite relatively flat overall international spending. However, these expected trends may not come to fruition if escalating global trade tensions and the potential for additional U.S. tariffs and retaliatory tariffs by other countries further adversely impact commodity prices, and, if sustained, lead to a decrease in drilling and completion activity in these markets. In a more severe scenario, prolonged trade disputes could trigger deeper and more widespread market disruptions, potentially resulting in significant downside risk to our activity forecasts across multiple regions.

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Oil and natural gas prices were volatile in 2024, a trend that continued into 2025. This volatility has been influenced by multiple factors, including geopolitical incidents from trade tensions, the ongoing war between Russia and Ukraine and conflicts in the Middle East involving Israel and Hamas, Hezbollah, Iran and the Houthis in Yemen (the “Middle East Conflicts”). Any further escalation of the Middle East Conflicts could intensify commodity price volatility. Oil prices have also been negatively impacted by concerns of an overall global economic slowdown, or a prolonged recession, which may result from current global trade tensions. In addition, long term global oil demand growth concerns have also negatively impacted oil prices. In recent years, to mitigate the impact of uncertain economic conditions on the global oil market, certain producing countries extended voluntary oil output cuts while maintaining spare capacity, enabling rapid production adjustments as market conditions warrant. However, more recently, these countries have begun to accelerate a planned increase to their production quotas. See further discussion below on oil and natural gas pricing.

Our products and services face significant competitive pressures across all offerings, which has and may continue to have a negative impact on market share and operating margins for certain product lines. This competitive pressure constrains our ability to raise prices necessary to offset rising costs, particularly during periods of higher cost inflation or periods affected by the uncertainty of escalating and de-escalating tariffs, with supply-chain costs impacted by the tariffs then in effect. While inflationary cost pressures moderated since the latter half of 2023, the implementation of new tariffs, including steel and aluminum, and the threat of additional tariffs in 2025, could lead to additional costs that we may not be able to recover through price increases.

The U.S. administration has announced targeted tariffs for many countries, many of which are substantial, that were paused for a 90-day period in April 2025, except for China which is currently subject to a high tariff rate. While the country-specific tariffs are paused, some other tariffs remain in place, including a baseline tariff on imported goods that previously took effect, as well as previously enacted tariffs on steel and aluminum. For Canada and Mexico specifically, goods covered by the United States-Mexico-Canada Agreement (“USMCA”) continue to have no tariff. Currently, we believe that our supply chain in Mexico is compliant with the USMCA, where Repeat Precision manufactures its products and certain components for NCS’ fracturing systems products. We believe that products we ship from the United States to Canada are compliant with the USMCA as well. The tariffs on steel have impacted our costs and we expect the tariffs on China to impact the price of chemicals we procure for our tracer diagnostics services business, once we have exhausted our current supply to levels that require additional orders. The tariffs ultimately imposed by the U.S. administration, particularly with regards to Mexico, Canada, and China, could impact our cost to conduct our business. In addition, as most of our sliding sleeves and other products sold in Canada are sourced from the United States, retaliatory tariffs implemented by Canada on goods entering from the United States could increase our product costs in Canada.

To counter inflationary pressures on the economy, central banks, including the U.S. Federal Reserve, increased reference interest rates several times in the past few years, actions typically expected to increase borrowing costs and restrain economic activity. Beginning in September 2024, the U.S. Federal Reserve implemented several modest decreases to the benchmark interest rate amid favorable inflation and job data. Although further rate cuts were anticipated for 2025, these rate changes may be postponed as the U.S. Federal Reserve evaluates monetary policy considering the tariffs imposed by the U.S. administration and any reciprocal tariffs from other countries.

Market Conditions

Oil and Natural Gas Drilling and Completion Activity

Oil and natural gas prices remain volatile. The average WTI crude oil price increased slightly for the first quarter of 2025 compared to the fourth quarter of 2024. Oil commodity prices increased in early January 2025, due in part to colder weather in North America and tighter sanctions on Russian and Iranian oil, but began to decrease in February and early March due to several macroeconomic conditions, including trade tensions between the United States and other countries, slightly lower global oil demand growth than originally expected, and an increase in oil supply provided by members of OPEC and certain other countries, including Russia (informally known as “OPEC+”) and non-OPEC+ members. Over the past few years, to address the uncertain outlook for the global economy and, specifically the oil markets, and to reduce the potential for an oversupply of oil and gas inventory, members of OPEC+ agreed to several collective voluntary oil production reductions. However, OPEC+ has announced and continues to reaffirm starting in April 2025, a phase out of voluntary oil production reductions.

Natural gas pricing continues to be volatile and has increased for the first quarter of 2025 to an average of $4.14 per MMBtu compared to an average of $2.44 per MMBtu for the fourth quarter of 2024. Realized natural gas prices for U.S. producers in West Texas and for Canadian E&P customers are typically at a discount to U.S. Henry Hub pricing. The natural gas price increases in 2025 are due to below-normal temperatures in early 2025, increased demand, the completion of two major LNG export terminals, and lower than expected surplus levels of natural gas in storage.

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Sustained significant declines in commodity prices, or sustained periods when the local pricing received in regional markets is below benchmark pricing, known in the industry as high differentials, would be expected to lead North American E&P companies to reduce drilling and completion activity, which could negatively impact our business.

Listed and depicted below are recent crude oil and natural gas pricing trends, as provided by the Energy Information Administration (“EIA”) of the U.S. Department of Energy:

|  | Average Price |
Quarter Ended |  | WTI Crude (per Bbl) |  |  | Brent Crude (per Bbl) |  |  | Henry Hub Natural Gas (per MMBtu) |
3/31/2024 |  | $ | 77.50 |  |  | $ | 82.92 |  |  | $ | 2.15 |
6/30/2024 |  |  | 81.81 |  |  |  | 84.68 |  |  |  | 2.07 |
9/30/2024 |  |  | 76.43 |  |  |  | 80.01 |  |  |  | 2.11 |
12/31/2024 |  |  | 70.73 |  |  |  | 74.66 |  |  |  | 2.44 |
3/31/2025 |  |  | 71.78 |  |  |  | 75.87 |  |  |  | 4.14 |

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Listed and depicted below are the average number of operating onshore rigs in the United States and in Canada per quarter since the first quarter of 2024, as provided by Baker Hughes Company. The quarterly changes are impacted by seasonality, particularly the effect of the spring break-up during the second quarter on the Canadian land rig count:

|  | Average Drilling Rig Count |
Quarter Ended |  | U.S. Land |  |  | Canada Land |  |  | North America Land |
3/31/2024 |  |  | 602 |  |  |  | 208 |  |  |  | 810 |
6/30/2024 |  |  | 583 |  |  |  | 134 |  |  |  | 717 |
9/30/2024 |  |  | 566 |  |  |  | 207 |  |  |  | 773 |
12/31/2024 |  |  | 571 |  |  |  | 194 |  |  |  | 765 |
3/31/2025 |  |  | 574 |  |  |  | 214 |  |  |  | 788 |

Over the past several years, North American E&P companies have been able to reduce their cost structures and have also utilized technologies, including ours, to increase efficiency and improve well performance. In the first quarter of 2025, the average U.S. land rig count was 574, a decline of 5% compared to the first quarter of 2024, but relatively stable compared to the fourth quarter of 2024. The average land rig count in Canada for the first quarter of 2025 was higher by 3% compared to the same period in 2024. For the remainder of the year, we currently expect U.S. rig counts and completion activity to be slightly lower than the comparable data for 2024, but we expect the Canadian activity level to be stable compared to the prior year. However, as noted above, these expected trends could be impacted by tariff policies of the U.S. administration and other countries.

A substantial portion of our business is subject to seasonality, which results in quarterly variability. In Canada, we typically experience higher activity levels in the first quarter of each year, as our customers take advantage of the winter freeze to gain access to remote drilling and production areas. In the past, our revenue in Canada has declined during the second quarter due to warming weather conditions that result in thawing, softer ground, difficulty accessing well sites and road bans that curtail drilling and completion activity. Access to well sites typically improves throughout the third and fourth quarters in Canada, leading to activity levels that are higher than in the second quarter, but usually lower than activity in the first quarter. Canadian completions activity can be impacted by wildfires that are usually experienced in the spring and summer seasons. Our business activity can also be affected by customer spending patterns. In some years, customers in both the United States and Canada may exhaust their capital budgets before year-end or reduce their activities during the winter holidays in late December, resulting in lower drilling and completion activity during the fourth quarter. As a result, we typically experience reduced customer activity at the end of the year.

How We Generate Revenues

We derive our revenues from the sale of our fracturing systems and enhanced recovery systems products and the provision of related services, casing buoyancy systems, liner hanger systems and toe initiation sleeves products and from sales of our tracer diagnostics services in addition to the sale of composite and dissolvable frac plugs, setting tools, perforating guns and related products through Repeat Precision.

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Product sales represented 70% and 72% of our revenues for the three months ended March 31, 2025 and 2024, respectively. Most of our sales are on a just-in-time basis, as specified in individual purchase orders, with a fixed price for our products. We occasionally supply our customers with large orders that may be fulfilled on negotiated terms. Services represented 30% and 28% of our revenues for the three months ended March 31, 2025 and 2024, respectively. Services include tool charges and associated personnel services related to fracturing systems and tracer diagnostics services. Our services are provided at agreed-upon rates to customers for the provision of our downhole frac isolation assembly, which may include our personnel, and for the provision of tracer diagnostics services.

During periods of low drilling and well completion activity, or as may be needed to compete in certain markets, we may, in some instances, lower the prices of our products and services. Our revenues are also impacted by well complexity since wells with more stages typically result in longer jobs, which may increase revenue attributable to the use of more sliding sleeves or increase composite frac plug sales and increase the volume of services we provide.

The percentages of our revenues derived from sales in Canada and denominated in Canadian dollars were approximately 75% and 72% for the three months ended March 31, 2025 and 2024, respectively. Our Canadian contracts are typically invoiced in Canadian dollars; therefore, the effects of foreign currency fluctuations impact our revenues and are regularly monitored. Strengthening of the U.S. dollar, our reporting currency, relative to the Canadian dollar would result in lower reported revenues, partially offset by lower reported cost of sales and selling, general and administrative (“SG&A”) expenses.

Although most of our sales are to North American E&P companies, we also have sales to customers outside of North America, and we expect sales to international customers to increase over time. These international sales are made through local NCS entities or to our local operating partners typically on a free on board or free carrier basis with a point of sale in the United States. Some of the locations in which we have operating partners or sales representatives include the Middle East and China. Our operating partners and representatives do not have authority to contractually bind NCS but market our products in their respective territories as part of their product or services offering.

Costs of Conducting our Business

Our cost of sales is comprised of expenses relating to the manufacture of our products in addition to the costs of our support services. Manufacturing cost of sales includes payments made to our suppliers for raw materials, such as steel, and payments made to machine shops for the manufacture of product components and finished assemblies and costs related to our employees that perform quality control analysis, assemble and test our products. We obtain certain chemicals utilized in our tracer diagnostics services business from suppliers in China, which are subject to tariffs that increase our costs. In addition, Repeat Precision operates a manufacturing facility with supporting personnel in Mexico, which has allowed us to reduce our costs for certain product categories. We review forecasted activity levels in our business and either directly procure or support our vendors in procuring the required raw materials with sufficient lead time to meet our business requirements. Prices for certain raw materials, including steel and chemicals and for purchased components and outsourced services, have increased in recent years due to inflation, exacerbated by the impacts resulting from Russia’s continuing invasion of Ukraine. Although steel pricing has declined from recent highs, tariffs have increased prices and threaten to further impact our supply chain as described above. Cost of sales for support services includes compensation and benefit-related expenses for employees who provide direct revenue generating services to customers in addition to the costs incurred by these employees for travel and subsistence while on site. Cost of sales includes other variable manufacturing costs, such as shrinkage, obsolescence, revaluation and scrap related to our existing inventory and costs related to the chemicals used and laboratory analysis associated with our tracer diagnostics services.

Our SG&A expenses are comprised of compensation expense, which includes compensation and benefit-related expenses for our employees who are not directly involved in revenue generating activities, including those involved in our research and development activities, as well as our general operating costs. These general operating costs include, but are not limited to: rent and occupancy for our facilities, information technology infrastructure services, software licensing, advertising and marketing, third party research and development, risk insurance and professional service fees for audit, legal and other consulting services. Our SG&A expenses also include litigation expenses and expected credit losses.

The percentage of our operating costs denominated in Canadian dollars (including cost of sales and SG&A expenses but excluding depreciation and amortization expense) approximated 35% and 29% for the three months ended March 31, 2025 and 2024, respectively.

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Results of Operations

Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024

The following tables summarize our results of operations, gross margins and revenues by geographic area for the periods presented (dollars in thousands):

|  | Three Months Ended |  |  |  |  |  |  |  |  |
|  | March 31, |  |  | Variance |
|  | 2025 |  |  | 2024 |  |  | $ |  |  | % |
Revenues |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Product sales |  | $ | 35,066 |  |  | $ | 31,758 |  |  | $ | 3,308 |  |  |  | 10.4 | %
Services |  |  | 14,939 |  |  |  | 12,100 |  |  |  | 2,839 |  |  |  | 23.5 | %
Total revenues |  |  | 50,005 |  |  |  | 43,858 |  |  |  | 6,147 |  |  |  | 14.0 | %
Cost of sales |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cost of product sales, exclusive of depreciation and amortization expense shown below |  |  | 20,352 |  |  |  | 19,692 |  |  |  | 660 |  |  |  | 3.4 | %
Cost of services, exclusive of depreciation and amortization expense shown below |  |  | 7,798 |  |  |  | 6,595 |  |  |  | 1,203 |  |  |  | 18.2 | %
Total cost of sales, exclusive of depreciation and amortization expense shown below |  |  | 28,150 |  |  |  | 26,287 |  |  |  | 1,863 |  |  |  | 7.1 | %
Selling, general and administrative expenses |  |  | 16,195 |  |  |  | 13,830 |  |  |  | 2,365 |  |  |  | 17.1 | %
Depreciation |  |  | 1,204 |  |  |  | 1,073 |  |  |  | 131 |  |  |  | 12.2 | %
Amortization |  |  | 167 |  |  |  | 167 |  |  |  | — |  |  |  | — | %
Income from operations |  |  | 4,289 |  |  |  | 2,501 |  |  |  | 1,788 |  |  |  | 71.5 | %
Other income (expense) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest expense, net |  |  | (42 | ) |  |  | (100 | ) |  |  | 58 |  |  |  | 58.0 | %
Other income, net |  |  | 883 |  |  |  | 1,137 |  |  |  | (254 | ) |  |  | (22.3 | )%
Foreign currency exchange loss, net |  |  | (3 | ) |  |  | (498 | ) |  |  | 495 |  |  |  | 99.4 | %
Total other income |  |  | 838 |  |  |  | 539 |  |  |  | 299 |  |  |  | 55.5 | %
Income before income tax |  |  | 5,127 |  |  |  | 3,040 |  |  |  | 2,087 |  |  |  | 68.7 | %
Income tax expense |  |  | 673 |  |  |  | 487 |  |  |  | 186 |  |  |  | 38.2 | %
Net income |  |  | 4,454 |  |  |  | 2,553 |  |  |  | 1,901 |  |  |  | 74.5 | %
Net income attributable to non-controlling interest |  |  | 398 |  |  |  | 483 |  |  |  | (85 | ) |  |  | (17.6 | )%
Net income attributable to NCS Multistage Holdings, Inc. |  | $ | 4,056 |  |  | $ | 2,070 |  |  | $ | 1,986 |  |  |  | 95.9 | %

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|  | Three Months Ended |  |  |  |  |  |  |  |  |
|  | March 31, |  |  | Variance |
|  | 2025 |  |  | 2024 |  |  | $ |  |  | % |
Gross Margin and Gross Margin Percentage: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cost of product sales, exclusive of depreciation and amortization expense |  | $ | 20,352 |  |  | $ | 19,692 |  |  | $ | 660 |  |  |  | 3.4 | %
Depreciation and amortization attributable to cost of product sales |  |  | 503 |  |  |  | 468 |  |  |  | 35 |  |  |  | 7.5 | %
Cost of product sales |  |  | 20,855 |  |  |  | 20,160 |  |  |  | 695 |  |  |  | 3.4 | %
Product sales gross profit |  | $ | 14,211 |  |  | $ | 11,598 |  |  | $ | 2,613 |  |  |  | 22.5 | %
Product sales gross margin |  |  | 40.5 | % |  |  | 36.5 | % |  |  |  |  |  |  |  |
Cost of services, exclusive of depreciation and amortization expense |  | $ | 7,798 |  |  | $ | 6,595 |  |  | $ | 1,203 |  |  |  | 18.2 | %
Depreciation and amortization attributable to cost of services |  |  | 212 |  |  |  | 148 |  |  |  | 64 |  |  |  | 43.2 | %
Cost of services |  |  | 8,010 |  |  |  | 6,743 |  |  |  | 1,267 |  |  |  | 18.8 | %
Services gross profit |  | $ | 6,929 |  |  | $ | 5,357 |  |  | $ | 1,572 |  |  |  | 29.3 | %
Services gross margin |  |  | 46.4 | % |  |  | 44.3 | % |  |  |  |  |  |  |  |
Total cost of sales |  | $ | 28,865 |  |  | $ | 26,903 |  |  | $ | 1,962 |  |  |  | 7.3 | %
Total gross profit |  | $ | 21,140 |  |  | $ | 16,955 |  |  | $ | 4,185 |  |  |  | 24.7 | %
Total gross margin |  |  | 42.3 | % |  |  | 38.7 | % |  |  |  |  |  |  |  |

|  | Three Months Ended |  |  |  |  |  |  |  |  |
|  | March 31, |  |  | Variance |
|  | 2025 |  |  | 2024 |  |  | $ |  |  | % |
Revenues by Geographic Area: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
United States |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Product sales |  | $ | 6,867 |  |  | $ | 7,767 |  |  | $ | (900 | ) |  |  | (11.6 | )%
Services |  |  | 2,505 |  |  |  | 2,244 |  |  |  | 261 |  |  |  | 11.6 | %
Total United States |  |  | 9,372 |  |  |  | 10,011 |  |  |  | (639 | ) |  |  | (6.4 | )%
Canada |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Product sales |  |  | 26,843 |  |  |  | 22,675 |  |  |  | 4,168 |  |  |  | 18.4 | %
Services |  |  | 10,875 |  |  |  | 8,994 |  |  |  | 1,881 |  |  |  | 20.9 | %
Total Canada |  |  | 37,718 |  |  |  | 31,669 |  |  |  | 6,049 |  |  |  | 19.1 | %
Other Countries |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Product sales |  |  | 1,356 |  |  |  | 1,316 |  |  |  | 40 |  |  |  | 3.0 | %
Services |  |  | 1,559 |  |  |  | 862 |  |  |  | 697 |  |  |  | 80.9 | %
Total other countries |  |  | 2,915 |  |  |  | 2,178 |  |  |  | 737 |  |  |  | 33.8 | %
Total |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Product sales |  |  | 35,066 |  |  |  | 31,758 |  |  |  | 3,308 |  |  |  | 10.4 | %
Services |  |  | 14,939 |  |  |  | 12,100 |  |  |  | 2,839 |  |  |  | 23.5 | %
Total revenues |  | $ | 50,005 |  |  | $ | 43,858 |  |  | $ | 6,147 |  |  |  | 14.0 | %

Revenues

Revenues were $50.0 million for the three months ended March 31, 2025 compared to $43.9 million for the three months ended March 31, 2024. Revenue growth was driven primarily by an increase in Canadian product sales and increases in services revenue across all of our geographic regions, partially offset by a decline in U.S. product sales attributed to certain project delays. The increase in product and service sales for Canada reflects robust activity levels, particularly for fracturing systems completions, a trend that began in the fourth quarter of 2024 and continued throughout the first quarter. The increase in international service revenues was driven by Middle East tracer diagnostics projects and North Sea fracturing systems product sales and services. Overall, product sales for the three months ended March 31, 2025 totaled $35.1 million compared to $31.8 million for the three months ended March 31, 2024. Services revenues totaled $14.9 million compared to $12.1 million for the same periods.

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Cost of sales

Cost of sales was $28.9 million, or 57.7% of revenues, for the three months ended March 31, 2025, compared to $26.9 million, or 61.3% of revenues, for the three months ended March 31, 2024. The decrease in the cost of sales as a percentage of revenues was primarily due to an increase in higher-margin international work in both the Middle East and North Sea, and increased product sales in Canada. We also benefitted from efficiencies related to our supply chain and our manufacturing/assembly operations, leveraging certain fixed costs and capitalizing on lean manufacturing strategies implemented over the last year. For the three months ended March 31, 2025, cost of product sales was $20.9 million, or 59.5% of product sales revenue, and cost of services was $8.0 million, or 53.6% of services revenue. For the three months ended March 31, 2024, cost of product sales was $20.2 million, or 63.5% of product sales revenue, and cost of services was $6.7 million, or 55.7% of services revenue.

Selling, general and administrative expenses

Selling, general and administrative expenses were $16.2 million for the three months ended March 31, 2025, compared to $13.8 million for the three months ended March 31, 2024. The increase in expense includes an incremental $1.0 million associated with annual incentive bonus accruals, $0.5 million of higher professional fees and $0.5 million of higher share-based compensation expense attributable to cash settled awards, which are remeasured at the balance sheet date based on the price of our common stock.

Other income, net

Other income, net was $0.9 million for the three months ended March 31, 2025, compared to $1.1 million for the three months ended March 31, 2024. The decline in other income reflects the absence of a contribution from a technical services and assistance agreement with our local partner in Oman for the first quarter of 2025, as that program ended in November 2024. Partially offsetting this year-over-year decrease was an increase in the royalty income earned from licensees for these periods.

Foreign currency exchange loss, net

Foreign currency exchange loss, net was less than $0.1 million for the three months ended March 31, 2025 compared to $0.5 million for the three months ended March 31, 2024. The change was due to the movement in the foreign currency exchange rates between the periods, primarily the Canadian dollar relative to the U.S. dollar.

Income tax expense

Income tax expense was $0.7 million for the three months ended March 31, 2025 as compared to $0.5 million for the three months ended March 31, 2024. Our effective tax rate (“ETR”) from continuing operations was 13.1% and 16.0% for the three months ended March 31, 2025 and 2024, respectively. The income tax expense for these periods primarily relates to results generated by our United States, Canada, and certain other foreign businesses, and the income tax provision for each three-month period excludes the effects of losses within the United States, Canada, or other jurisdictions, if any, from which we cannot currently benefit. In addition, the income tax provision includes the effects of changes in valuation allowances established against our previously recognized deferred tax assets, some of which are derived from net operating loss carryforwards in the United States, Canada, or other jurisdictions. Therefore, significant variations exist in the customary relationship between income tax expense and pretax accounting income for the three month periods ended March 31, 2025 and 2024.

Liquidity and Capital Resources

Our primary sources of liquidity are our existing cash and cash equivalents, cash flows from operations and potential borrowings under our secured asset-based revolving credit facility (the “ABL Facility”). As of March 31, 2025, we had cash and cash equivalents of $23.0 million, and total outstanding indebtedness of $7.6 million related to finance lease obligations. Our ABL Facility consists of an asset-based revolving credit facility in an aggregate principal amount of $35.0 million. Total borrowings are limited to a borrowing base calculated on the eligible accounts receivable and eligible inventory, provided it does not include credit for the assets of Repeat Precision. At March 31, 2025, our available borrowing base under the ABL Facility was $26.8 million, with no outstanding borrowings. The amount available to be drawn under the ABL Facility may decline from current levels due to reductions in our borrowing base or a springing financial covenant if our business were to be adversely impacted by a decline in market conditions. We were in compliance with our debt covenants at March 31, 2025.

In addition, Repeat Precision’s promissory note with Security State Bank & Trust, Fredericksburg (the “Repeat Precision Promissory Note”) has total aggregate borrowing capacity of $2.5 million, is expected to be renewed upon maturity in May 2025, and has no borrowings outstanding as of March 31, 2025.

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We believe that our cash on hand, cash flows from operations and potential borrowings under our ABL Facility will be sufficient to fund our capital expenditure and liquidity requirements for the next twelve months and after. Our principal liquidity needs have been, and are expected to continue to be, capital expenditures, working capital, debt service and potential mergers and acquisitions.

Our capital expenditures for the three months ended March 31, 2025 and 2024 were $0.5 million and $0.3 million, respectively. We plan to incur approximately $1.5 million to $1.8 million in capital expenditures in total during 2025, which includes (i) upgrades to our Repeat Precision manufacturing facilities, (ii) upgrades to our tracer diagnostics deployment, sampling and laboratory equipment and (iii) upgrades to our manufacturing and field service equipment to support North American fracturing systems and well construction businesses.

To the extent we require additional liquidity to fund our capital requirements, including our finance lease obligations, or repay existing indebtedness, we would expect to obtain it through the incurrence of additional indebtedness, the proceeds of equity issuances, or a combination thereof. Our liquidity and ability to meet our obligations and fund capital requirements also depend on our future financial performance including the ability to manage costs, which is subject to general economic, financial and other factors that are beyond our control. Accordingly, we cannot provide assurance that our business will generate sufficient cash flow from operations or that funds will be available from additional indebtedness, the capital markets or otherwise to meet our liquidity needs. If we decide to pursue one or more significant acquisitions, we may incur additional debt or sell equity to finance such acquisitions, which could result in incremental expenses or dilution.

Cash Flows

The following table provides a summary of cash flows from operating, investing and financing activities for the periods presented (in thousands):

|  | Three Months Ended |
|  | March 31, |
|  | 2025 |  |  | 2024 |
Net cash used in operating activities |  | $ | (1,645 | ) |  | $ | (1,880 | )
Net cash used in investing activities |  |  | (451 | ) |  |  | (136 | )
Net cash used in financing activities |  |  | (790 | ) |  |  | (630 | )
Effect of exchange rate changes on cash and cash equivalents |  |  | 3 |  |  |  | (70 | )
Net change in cash and cash equivalents |  | $ | (2,883 | ) |  | $ | (2,716 | )

Operating Activities

Net cash used in operating activities was $1.6 million and $1.9 million for the three months ended March 31, 2025 and 2024, respectively. The reduction in the use of cash during the first quarter of 2025 reflected higher net income of $1.9 million, offset by higher cash payments for incentive bonuses and higher payments related to the vesting of share-based awards which are cash-settled, remeasured based on the price of our common stock. Additionally, the revenue increase for the first three months of 2025 compared to the same period in 2024 impacted our working capital, including the timing of trade receivable billings and collections, inventory levels and payments for materials and other components. Specifically, for change in working capital items for the first quarter of 2025 relative to change for the same period in 2024, our trade receivables increased by a smaller amount (due in part to favorable collections experience), our trade payables increased, our inventory reduction was smaller and our accrued and other liabilities declined (associated with the bonus and award payments noted above).

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Investing Activities

Net cash used in investing activities was $0.5 million and $0.1 million for the three months ended March 31, 2025 and 2024, respectively, reflecting an increase of investment in property and equipment as well as a decrease in the amount of proceeds received from the sale of retired property and equipment.

Financing Activities

Net cash used in financing activities was $0.8 million and $0.6 million for the three months ended March 31, 2025 and 2024. Our primary uses of funds for the three months ended March 31, 2025 and 2024 were principal payments related to our finance lease obligations totaling $0.5 million and $0.4 million, respectively, payments of $0.3 million and $0.2 million, respectively, for our treasury shares withheld to settle withholding tax requirements for equity-settled awards, and a distribution of $0.5 million to our joint venture partner for the three months ended March 31, 2024. Net borrowings and repayments under the Repeat Promissory Note had no relative impact on cash flows from financing activities for the three months ended March 31, 2025, but provided a net cash inflow of $0.6 million for the three months ended March 31, 2024.

Material Cash Requirements

There have been no significant changes in our material cash requirements from those disclosed in the Annual Report for the year ended December 31, 2024.

Critical Accounting Estimates

There are no material changes to our critical accounting estimates from those included in the Annual Report for the year ended December 31, 2024.

Recently Issued Accounting Pronouncements

See “Note 1. Basis of Presentation” to our unaudited condensed consolidated financial statements for a discussion of the recent accounting pronouncements issued by the Financial Accounting Standards Board.

Smaller Reporting Company Status

We are a “smaller reporting company” as defined by Section 12b-2 of the Exchange Act, meaning that we are not an investment company, an asset-backed issuer, or a majority-owned subsidiary of a parent company that is not a smaller reporting company and have a public float of less than $250 million. As a smaller reporting company, we may take advantage of specified reduced reporting and other burdens that are otherwise applicable generally to public companies that do not qualify for the classification, including among other things, providing only two years of audited financial statements.

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report includes certain forward-looking statements within the meaning 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, such as those contained in Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

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:

| ● | declines in the level of oil and natural gas E&P activity in Canada, the United States and internationally;

| ● | oil and natural gas price fluctuations;

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| ● | significant competition for our products and services that results in pricing pressures, reduced sales, or reduced market share;

| ● | inability to successfully implement our strategy of increasing sales of products and services into the U.S. and international markets;

| ● | loss of significant customers;

| ● | losses and liabilities from uninsured or underinsured business activities and litigation;

| ● | change in trade policy, including the impact of tariffs;

| ● | our failure to identify and consummate potential acquisitions;

| ● | the financial health of our customers including their ability to pay for products or services provided;

| ● | our inability to integrate or realize the expected benefits from acquisitions;

| ● | our inability to achieve suitable price increases to offset the impacts of cost inflation;

| ● | loss of any of our key suppliers or significant disruptions negatively impacting our supply chain;

| ● | risks in attracting and retaining qualified employees and key personnel;

| ● | risks resulting from the operations of our joint venture arrangement;

| ● | currency exchange rate fluctuations;

| ● | impact of severe weather conditions;

| ● | 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, guidelines and regulations for the use of explosives;

| ● | impairment in the carrying value of long-lived assets including goodwill;

| ● | system interruptions or failures, including complications with our enterprise resource planning system, cybersecurity breaches, identity theft or other disruptions that could compromise our information;

| ● | our inability to successfully develop and implement new technologies, products and services that align with the needs of our customers, including addressing the shift to more non-traditional energy markets as part of the energy transition and the adoption of artificial intelligence and machine learning;

| ● | our inability to protect and maintain critical intellectual property assets, the inability to protect our current royalty income, or the losses and liabilities from adverse decisions in intellectual property disputes;

| ● | loss of, or interruption to, our information and computer systems;

| ● | our failure to establish and maintain effective internal control over financial reporting;

| ● | 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;

| ● | the reduction in our ABL 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.

For the reasons described above, as well as factors identified in “Item 1A. Risk Factors” in this Quarterly Report and the section of the Annual Report entitled “Risk Factors,” we caution you against relying on any forward-looking statements. Any forward-looking statement made by us in this Quarterly Report 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.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

For our quantitative and qualitative disclosures about market risk, see Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” in our Annual Report for the year ended December 31, 2024. Our exposure to market risk has not changed materially since December 31, 2024.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, including our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of March 31, 2025. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer, concluded that, as of March 31, 2025, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes to our internal control over financial reporting that occurred during the quarter ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

See “Note 10. Commitments and Contingencies” of our unaudited condensed consolidated financial statements for further information regarding our legal proceedings.

Item 1A. Risk Factors

There have been no material changes from the risk factors disclosed in our Annual Report for the year ended December 31, 2024.

Item 5. Other Information

During the quarter ended March 31, 2025, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K.

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Item 6. Exhibits

Exhibit |  |
No. |  | Description
* | 31.1 |  | Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
* | 31.2 |  | Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
** | 32.1 |  | Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
** | 32.2 |  | Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
*** | 101.INS |  | Inline XBRL Instance Document
*** | 101.SCH |  | Inline XBRL Taxonomy Extension Schema
*** | 101.CAL |  | Inline XBRL Taxonomy Extension Calculation Linkbase
*** | 101.DEF |  | Inline XBRL Taxonomy Extension Definition Linkbase
*** | 101.LAB |  | Inline XBRL Taxonomy Extension Label Linkbase
*** | 101.PRE |  | Inline XBRL Taxonomy Extension Presentation Linkbase
*** | 104 |  | Cover Page Interactive Data File (formatted in Inline iXBRL and contained in Exhibit 101)
* | Filed herewith.
** | Furnished herewith.
*** | Submitted electronically with this Report.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: May 1, 2025 | NCS Multistage Holdings, Inc.
| By: | /s/ Mike Morrison
|  | Mike Morrison
|  | Chief Financial Officer and Treasurer
|  | (Principal Financial Officer and Authorized Signatory)

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