NCS Multistage Holdings Reports Strong Q3 Growth Driven by International Expansion and ResMetrics Integration

Stonegate Capital Partners has updated its coverage on NCS Multistage Holdings, Inc. (NASDAQ: NCSM) following the company's third quarter 2025 results that demonstrated robust growth despite challenging market conditions. The oilfield services provider reported total revenues of $46.5 million, representing a 6.0% year-over-year increase that outperformed broader industry activity levels.

The revenue growth was primarily driven by strong performance in international markets and the United States, with international revenue increasing approximately 38.0% year-over-year and U.S. revenue growing by approximately 36.0% during the same period. This expansion was supported by increased fracturing systems activity in regions including the North Sea and wellbore construction projects in the Middle East. The company's tracer diagnostics business also contributed significantly to this growth, including approximately $2 million from the recently acquired ResMetrics platform.

NCSM reported adjusted gross margins of 41.7%, slightly down from 42.1% in the third quarter of 2024. Despite this minor contraction, the company maintained strong financial performance with gross profit of $19.4 million and adjusted EBITDA of $7.0 million for the quarter. These results exceeded Stonegate's estimates of $46.1 million in revenue, $18.9 million in gross profit, and $7.3 million in adjusted EBITDA.

The company's balance sheet remains healthy, with NCSM ending the third quarter with net working capital of $63.0 million, a 12.6% increase from $56.4 million at year-end 2024. This improvement was driven by higher accounts receivable and inventory levels. The company reported $25.3 million in cash and had an additional $19.4 million available under its undrawn revolving credit facility, resulting in a total liquidity position of $44.7 million. This strong liquidity position compares favorably to total debt of only $7.4 million, consisting entirely of finance lease obligations.

Free cash flow less distributions to non-controlling interest was a source of $6.8 million as of the third quarter, a substantial improvement from just $0.35 million in the prior year period. This enhancement reflects improved operating cash generation and disciplined investment strategies.

The integration of ResMetrics, acquired in late July 2025, is progressing ahead of schedule according to management. The combination of ResMetrics' chemical tracer lab capabilities and PetroXY web portal with NCS's existing tracer portfolio and international footprint is expected to create a category-leading diagnostics platform. Management anticipates medium-term synergy potential from best-practice adoption and scaled product and service development.

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

Stonegate's valuation analysis using both discounted cash flow and EV/EBITDA comparison methods indicates a fair value range for NCSM shares. The DCF analysis produces a valuation range of $48.26 to $56.97 with a midpoint of $52.05, while the EV/EBITDA valuation results in a range of $46.61 to $56.91 with a midpoint of $51.76. These valuations reflect the company's strong market position and growth prospects in international markets.

The company's performance is particularly significant given the broader industry context, demonstrating NCSM's ability to outperform sector-wide activity levels through strategic international expansion and successful acquisition integration. The ResMetrics integration represents a key strategic move that enhances NCSM's diagnostic capabilities and positions the company for continued growth in the evolving oilfield services landscape.