DALLAS, TX -- March 5th, 2026 -- NCS Multistage Holdings, Inc. (NASDAQ: NCSM): Stonegate Capital Partners Updates Coverage on NCS Multistage Holdings, Inc. (NASDAQ: NCSM). In FY25, NCSM grew revenue 13% to $183.6M despite a still-challenging activity backdrop, driven by product strength across regions, U.S. momentum in fracturing systems and Repeat Precision, continued traction in the North Sea and Middle East, and a $5.2M contribution from ResMetrics following the July acquisition. The quality of growth was solid with ex-ResMetrics revenue still increased 10%, adj EBITDA rose 20% to $26.7M, and EBITDA margin expanded ~80 bps to 15%, while adjusted gross margin held at 41% despite some service-mix pressure. Free cash flow after NCI nearly doubled to $18.9M, reinforcing the benefits of the Company’s asset-light model and supporting the view that FY25 outperformance was driven more by share gains, product execution, and targeted expansion than by a stronger underlying market.
Quarterly Results: In 4Q25, NCSM reported revenue, gross profit, and adj EBITDA of $50.6M, $21.2M, and $9.3M, respectively. This compares to our estimates of $43.6M, $18.3M, and $5.8M, respectively. The beat was driven by U.S. outperformance, with revenue up 69% y/y on higher sliding sleeve/frac plug sales and a $2.8M ResMetrics contribution, while international remained positive on North Sea and Middle East activity. Canada declined 7% on softer services. Gross margin edged lower on mix, but EBITDA held up on lower SG&A and a $0.9M litigation recovery.
Balance Sheet, Liquidity, and Cash Flows: NCSM ended 4Q25 with net working capital of $59.1M and liquidity of $61.1M ($36.7M cash + $24.4M undrawn ABL) against just $7.6M of finance lease debt. Free cash flow less distributions to NCI increased to $18.9M (vs. $9.9M) on stronger operating cash flow and minimal net capex (~$0.5M). Overall, we view year-end liquidity as supportive of internal investment and any potential tuck-in M&A, reflecting the cash-generative, asset-light model.
ResMetrics Integration: NCSM closed ResMetrics on 7/31/25 for $7.15M in total cash consideration, adding a tracer diagnostics platform that generated > $10M of trailing 12-month revenue as of 6/30/25 and delivered 30%+ EBITDA margins. Integration is moving forward with the U.S. tracer business now operating under the ResMetrics brand, sales/BD combined, and lab systems upgraded, with Tulsa lab/manufacturing centralization targeted by mid-2026. Management continues to target $1-$2M of run-rate cost synergies by mid-2026 and sees upside from expanding ResMetrics technologies into Canada and leveraging NCS’s international footprint over time.
Updated Guidance: For 1Q26, management guides revenue of $49-53M, adjusted gross margin of 39-41%, and Adjusted EBITDA of $6.5-8.5M. This is coupled with FY26 revenue guidance of $184-194M and Adjusted EBITDA of $26-29.0M; management also forecasts FY26 free cash flow less distributions to NCI of $12-16M and gross Capex of $1.5-2.0M. We would note that margin expansion is expected in 2H26, in line with the anticipated acceleration in revenue growth in 2H26. We have made modest adjustments to our model.
Valuation: We use both a DCF and EV/EBITDA comp analysis to guide our valuation. Our DCF analysis produces a valuation range of $51.85 to $61.46 with a mid-point of $56.00. Our EV/EBITDA valuation results in a range of $61.09 to $66.75 with a mid-point of $63.92.
