NCS Multistage Holdings, Inc. (NCSM): Business Model Canvas [10-2024 Updated]

Discover the dynamic business model of NCS Multistage Holdings, Inc. (NCSM), a key player in the oil and gas industry. From innovative fracturing systems to strategic partnerships, NCSM is at the forefront of enhancing recovery processes. In this blog post, we’ll explore how NCSM's comprehensive approach—encompassing key partnerships, activities, and value propositions—drives its success in both North American and international markets. Read on to uncover the essential components that fuel NCSM's growth and resilience.

NCS Multistage Holdings, Inc. (NCSM) - Business Model: Key Partnerships

Collaborations with pressure pumping services

NCS Multistage Holdings collaborates with various pressure pumping services to enhance their operational capabilities. In the nine months ended September 30, 2024, NCSM reported product sales of $82.5 million, with significant contributions from their joint venture partners in pressure pumping operations, particularly in the United States and Canada.

Partnerships with local operating entities in international markets

NCSM has established partnerships with local operating entities in international markets, particularly in the Middle East and North Sea regions. This strategy has been pivotal in driving revenue growth, with international services significantly contributing to the overall revenues of $117.6 million for the nine months ended September 30, 2024, compared to $107.2 million for the same period in 2023. The Middle East tracer work and North Sea frac systems have been highlighted as key growth areas.

Relationships with suppliers for raw materials

NCS Multistage maintains strong relationships with suppliers for raw materials, crucial for their manufacturing processes. The company sources certain chemicals from suppliers in China, which have been subject to tariffs. As of September 30, 2024, NCSM reported an increase in costs due to inflation affecting raw materials like steel and chemicals, although there has been a recent decline in steel prices.

Joint ventures, such as Repeat Precision, LLC

One significant joint venture is with Repeat Precision, LLC, which has been instrumental in product sales. For the three months ended September 30, 2024, NCSM reported an increase in revenues from this joint venture, contributing to total revenues of $44.0 million, a 15% increase year-over-year. The Repeat Precision Promissory Note has an aggregate borrowing capacity of $2.5 million as of September 30, 2024.

Partnership Type	Details	Financial Impact
Pressure Pumping Services	Collaboration to enhance operational capabilities	$82.5 million in product sales for nine months ended September 30, 2024
Local Operating Entities	Partnerships in Middle East and North Sea	$117.6 million in total revenues for nine months ended September 30, 2024
Suppliers for Raw Materials	Sourcing chemicals and steel	Increased costs due to tariffs and inflation
Joint Ventures	Repeat Precision, LLC	Contributed to $44.0 million in revenues for three months ended September 30, 2024

NCS Multistage Holdings, Inc. (NCSM) - Business Model: Key Activities

Development and manufacturing of fracturing systems

The development and manufacturing of fracturing systems are central to NCS Multistage's operations. As of September 30, 2024, product sales amounted to $82.5 million, reflecting an increase from $76.1 million in the prior year, indicating a growth of 8.3%. The gross profit for product sales was $29.7 million, with a gross margin of 36.1%. The company has focused on optimizing its manufacturing processes, which are supported by facilities in Mexico that help reduce costs for certain product categories.

Provision of tracer diagnostics services

NCS Multistage also provides tracer diagnostics services, which accounted for $35.1 million in revenues for the nine months ended September 30, 2024, compared to $31.1 million for the same period in 2023, representing a 12.9% increase. The services gross profit was $16.4 million, with a gross margin of 46.6%. The company utilizes specific chemicals for these services, sourced from suppliers in China, which are subject to tariffs that can affect costs.

Customer support and service delivery

Customer support and service delivery are critical activities for NCS Multistage. The company provides tools and personnel for fracturing systems and tracer diagnostics services, with service revenues representing approximately 28% of total revenues in the third quarter of 2024. The cost of services was $18.7 million for the nine months ended September 30, 2024, which translates to a gross profit of $16.4 million. The company has been actively managing its customer relationships to ensure high levels of service and support.

Research and development for product innovation

Research and development (R&D) is vital for product innovation at NCS Multistage. The company has allocated significant resources towards R&D to enhance its product offerings and maintain competitive advantages. As of September 30, 2024, NCS Multistage’s total cash and cash equivalents were $15.3 million, reflecting its ability to invest in R&D initiatives. The planned capital expenditures for 2024 include investments in new computing equipment and upgrades to technology used in tracer diagnostics.

Key Activity	Revenue (2024)	Revenue (2023)	Gross Profit (2024)	Gross Margin (%)
Fracturing Systems	$82.5 million	$76.1 million	$29.7 million	36.1%
Tracer Diagnostics Services	$35.1 million	$31.1 million	$16.4 million	46.6%
Total Revenues	$117.6 million	$107.2 million	$46.1 million	39.2%

NCS Multistage Holdings, Inc. (NCSM) - Business Model: Key Resources

Technological expertise in fracturing systems

NCS Multistage Holdings, Inc. specializes in advanced fracturing systems, which are essential for optimizing oil and gas extraction. The company has developed proprietary technologies that enhance the efficiency and effectiveness of hydraulic fracturing operations. As of September 30, 2024, the company reported a gross profit margin of 37.2% for product sales, reflecting the competitive advantage provided by its technological innovations.

Manufacturing facilities and equipment

The company operates multiple manufacturing facilities equipped with state-of-the-art machinery for producing fracturing systems and related products. In 2024, NCS Multistage's capital expenditures were approximately $1.5 million to $1.7 million, directed towards equipment upgrades and enhancements to manufacturing capabilities. The total cost of sales for the nine months ended September 30, 2024, was $69.5 million, indicating significant operational scale.

Facility Type	Location	Equipment Value	Annual Capacity
Fracturing Systems Plant	Texas	$10 million	5,000 units
Research & Development Center	Oklahoma	$5 million	Innovation projects
Field Service Equipment	Various Locations	$2.5 million	Support operations

Skilled workforce for operations and support

NCS Multistage employs a highly skilled workforce that is crucial for both operational efficiency and customer support. As of September 30, 2024, the company reported a total of 600 employees, with approximately 50% engaged in technical and engineering roles. The company’s commitment to training and development enhances its human capital, allowing it to maintain a competitive edge in the market.

Strong financial position with access to credit

NCS Multistage Holdings, Inc. maintains a robust financial position with cash and cash equivalents amounting to $15.3 million as of September 30, 2024. The company has an asset-based revolving credit facility with a borrowing capacity of $35 million, of which $21.7 million was available for use. Additionally, the total outstanding indebtedness related to finance leases was $8.6 million.

Financial Metric	Amount
Cash and Cash Equivalents	$15.3 million
Total Outstanding Indebtedness	$8.6 million
Available Borrowing Base	$21.7 million
Net Income (Nine Months Ended September 30, 2024)	$4.4 million

NCS Multistage Holdings, Inc. (NCSM) - Business Model: Value Propositions

Efficient pinpoint stimulation for oil and gas wells

NCS Multistage Holdings, Inc. specializes in providing efficient solutions for well stimulation, focusing on pinpoint accuracy to enhance oil and gas extraction. Their proprietary technologies, including composite frac plugs and advanced sliding sleeves, are designed to optimize the hydraulic fracturing process, maximizing recovery rates while minimizing environmental impact.

High-quality fracturing and recovery products

The company offers a range of high-quality products that cater to the needs of exploration and production (E&P) companies. For the nine months ended September 30, 2024, product sales reached $82.5 million, representing an 8.3% increase from $76.1 million in the same period of 2023. This growth is attributed to the increasing demand for NCS's innovative fracturing solutions in both domestic and international markets.

Product Category	Sales Amount (2024)	Sales Amount (2023)	Percentage Growth
Composite Frac Plugs	$31.7 million	$27.3 million	16.1%
Sliding Sleeves	$50.8 million	$48.0 million	5.8%

Tailored services for specific customer needs

NCS Multistage provides tailored services that address specific customer requirements, enhancing operational efficiency. The company reported service revenues of $35.1 million for the nine months ended September 30, 2024, a 12.9% increase from $31.1 million in 2023. This indicates a growing recognition among E&P companies of the value of customized service offerings.

Proven track record in North American markets

NCS Multistage has established a strong presence in North America, with a significant portion of its revenues derived from the U.S. and Canadian markets. For the three months ended September 30, 2024, total revenues reached $44.0 million, up from $38.3 million in 2023, indicating a robust demand for its products and services.

Geographic Area	Q3 2024 Revenue	Q3 2023 Revenue	Percentage Growth
United States	$11.1 million	$8.0 million	39.0%
Canada	$28.9 million	$28.1 million	2.6%

NCS Multistage Holdings, Inc. (NCSM) - Business Model: Customer Relationships

Direct sales and personalized service approach

NCS Multistage Holdings, Inc. employs a direct sales model, focusing on personalized service to enhance customer engagement. The company’s product sales for the three months ended September 30, 2024, reached $31.7 million, reflecting a 16.1% increase from $27.3 million in the same period in 2023. This growth underscores the effectiveness of their direct sales strategy in meeting customer needs in a competitive market.

Long-term contracts with key clients

NCSM has established long-term contracts that secure ongoing relationships with key clients. For the nine months ended September 30, 2024, the company's revenues totaled $117.6 million, a 9.6% increase from $107.2 million in the same period in 2023. A significant portion of these revenues is derived from long-term agreements, particularly in Canada, where approximately 66% of revenues for the three months ended September 30, 2024, were denominated in Canadian dollars, indicating a stable customer base.

Technical support for product usage and troubleshooting

NCSM provides comprehensive technical support to assist customers with product usage and troubleshooting. The company's service revenues for the three months ended September 30, 2024, amounted to $12.3 million, an increase of 12.2% from $11.0 million in 2023. This growth highlights the importance of technical support in driving customer satisfaction and retention.

Regular communication for feedback and improvement

Regular communication with clients is a cornerstone of NCSM's customer relationship strategy. Continuous feedback mechanisms are implemented to improve service delivery and product offerings. For instance, the company’s selling, general, and administrative expenses were $14.1 million for the three months ended September 30, 2024, reflecting investments in customer relationship management and service enhancements.

Customer Relationship Aspect	Details	Financial Impact
Direct Sales	Focus on personalized customer interactions	Product sales increased to $31.7 million (Q3 2024)
Long-term Contracts	Stable revenue from key clients	Revenues of $117.6 million (9M 2024)
Technical Support	Assistance with product usage	Service revenues of $12.3 million (Q3 2024)
Regular Communication	Feedback for service improvement	SG&A expenses of $14.1 million (Q3 2024)

NCS Multistage Holdings, Inc. (NCSM) - Business Model: Channels

Direct sales force targeting E&P companies

NCS Multistage employs a dedicated sales force focused on exploration and production (E&P) companies. This direct sales approach allows NCSM to build strong relationships with key clients, understanding their specific needs and customizing solutions accordingly. For the nine months ended September 30, 2024, product sales were $82.5 million, representing an increase from $76.1 million in the same period of 2023, indicating a robust demand driven in part by this direct engagement strategy.

Online platforms for product information

The company utilizes online platforms to disseminate product information, enhance customer engagement, and streamline the purchasing process. This digital strategy is crucial for reaching a broader audience, particularly in international markets. As of September 30, 2024, NCSM reported total revenues of $117.6 million, reflecting a strategic increase in online visibility and accessibility of product offerings.

Trade shows and industry conferences for visibility

NCS Multistage actively participates in trade shows and industry conferences, which are vital for brand visibility and networking. These events allow the company to showcase its innovative products and services, directly engaging with potential clients and industry stakeholders. In the first nine months of 2024, revenues from international services increased significantly, partly attributed to exposure gained at these events.

International representatives for market penetration

To facilitate market penetration, NCS Multistage employs international representatives in various regions, including the Middle East and China. These representatives help promote NCSM's products and services, leveraging local market knowledge to enhance sales efforts. In 2024, product sales outside North America saw a notable increase, contributing to the overall revenue growth.

Channel Type	Description	Impact on Revenue (2024)
Direct Sales Force	Dedicated sales targeting E&P companies, fostering strong relationships.	$82.5 million in product sales for nine months ended September 30, 2024.
Online Platforms	Digital channels for product information and customer engagement.	Contributed to total revenues of $117.6 million.
Trade Shows	Participation in industry events for brand visibility and networking.	Increased international service revenues, aiding overall growth.
International Representatives	Local representatives promoting products in key international markets.	Significant growth in international sales.

NCS Multistage Holdings, Inc. (NCSM) - Business Model: Customer Segments

North American exploration and production companies

NCS Multistage primarily serves North American exploration and production (E&P) companies, which are crucial for its revenue. In the three months ended September 30, 2024, product sales to these companies were approximately $9.5 million, a significant increase from $5.2 million in the same period of 2023, reflecting an increase of 82.5% .

For the nine months ended September 30, 2024, product sales to North American E&P companies totaled $25.8 million, compared to $20.2 million in the same period in 2023, representing a growth of 27.7% .

International oil and gas operators

NCS Multistage has expanded its customer base to include international oil and gas operators, particularly in regions such as the Middle East and North Sea. In the three months ended September 30, 2024, international sales contributed $4.0 million to total revenues .

For the nine months ended September 30, 2024, international product sales reached $3.6 million, a notable increase from $1.9 million in the previous year, indicating a growth of 89.4% .

Companies requiring fracturing and diagnostics services

NCS Multistage provides specialized fracturing and diagnostics services to various clients in the oil and gas sector. In the three months ended September 30, 2024, service revenues from these offerings were approximately $12.3 million, compared to $10.9 million in the same period of 2023 .

For the nine months ended September 30, 2024, service revenues totaled $35.1 million, an increase from $31.1 million in 2023, representing a growth of 12.9% .

Clients in the energy transition seeking innovative solutions

As the industry shifts towards more sustainable practices, NCS Multistage is targeting clients focused on energy transition. This includes companies looking for innovative hydraulic fracturing solutions and technologies that reduce environmental impact. NCS's investment in R&D for sustainable technologies is expected to enhance its appeal to this customer segment.

In 2024, NCS Multistage has allocated approximately $1.5 million towards developing eco-friendly fracturing solutions, aiming to capture a share of the growing market for sustainable energy operations .

Customer Segment	Q3 2024 Revenue	Q3 2023 Revenue	Growth Rate	9M 2024 Revenue	9M 2023 Revenue	Growth Rate
North American E&P Companies	$9.5 million	$5.2 million	82.5%	$25.8 million	$20.2 million	27.7%
International Operators	$4.0 million	$1.9 million	89.4%	$3.6 million	$1.9 million	89.4%
Fracturing & Diagnostics Services	$12.3 million	$10.9 million	12.8%	$35.1 million	$31.1 million	12.9%
Energy Transition Clients	$1.5 million (R&D Investment)	N/A	N/A	N/A	N/A	N/A

NCS Multistage Holdings, Inc. (NCSM) - Business Model: Cost Structure

Manufacturing and operational costs

The manufacturing and operational costs for NCS Multistage Holdings, Inc. were reported as follows:

• Cost of product sales: $52.7 million for the nine months ended September 30, 2024, accounting for 63.9% of product sales revenue.
• Cost of services: $18.7 million for the same period, representing 53.4% of services revenue.
• Total cost of sales for the nine months ended September 30, 2024: $71.4 million, or 60.8% of total revenues of $117.6 million.

Additionally, the cost of sales included payment to suppliers for raw materials, costs related to quality control, and assembly labor. The company has also benefited from operational restructuring efforts, which have helped to reduce these costs.

Research and development expenditures

Research and development expenditures were not explicitly detailed in the financial statements; however, related costs are embedded within the general operational expenses. The company emphasizes continuous improvement in its manufacturing processes and product offerings, which inherently involves R&D spending. The total selling, general, and administrative expenses, which include R&D costs, were reported as $14.1 million for the three months ended September 30, 2024.

Selling, general, and administrative expenses

For the nine months ended September 30, 2024, selling, general, and administrative expenses were:

• Total SG&A expenses: $42.8 million.
• Depreciation associated with SG&A: $1.4 million.
• Increase in annual incentive bonus accruals: $2.7 million year-over-year.

This indicates a slight decrease in SG&A expenses compared to $43.3 million for the same period in 2023, reflecting cost-saving measures from restructuring efforts.

Costs associated with supply chain and logistics

The costs associated with supply chain and logistics are influenced by several factors:

• Supply chain costs include payments made to machine shops for product components and finished assemblies.
• Logistics costs related to travel and subsistence for employees providing direct revenue-generating services to customers.
• There are tariffs on certain chemicals used in tracer diagnostics services sourced from suppliers in China, which impact overall costs.

Overall, the supply chain costs are affected by fluctuations in raw material prices, which have seen recent increases due to inflation and geopolitical events, such as the conflict in Ukraine. The company has been proactive in managing these costs to maintain profitability.

Cost Category	Q3 2024 Amount (in millions)	Q3 2023 Amount (in millions)	Variance (in millions)	Variance (%)
Cost of Product Sales	52.7	49.1	3.6	7.4%
Cost of Services	18.7	17.0	1.7	10.1%
Total Cost of Sales	71.4	66.1	5.3	8.1%
SG&A Expenses	42.8	43.3	(0.5)	(1.2%)

NCS Multistage Holdings, Inc. (NCSM) - Business Model: Revenue Streams

Sales from fracturing systems and enhanced recovery products

The revenue generated from the sale of fracturing systems and enhanced recovery products reflects a substantial portion of NCS Multistage Holdings' income. For the three months ended September 30, 2024, product sales amounted to $31.7 million, representing a 16.1% increase from $27.3 million in the same period of 2023.

For the nine months ending September 30, 2024, total product sales reached $82.5 million, up from $76.1 million, marking an 8.3% growth year-over-year.

Service fees for tracer diagnostics and related services

NCS Multistage also derives significant revenue from service fees related to tracer diagnostics and associated services. For the three months ended September 30, 2024, service revenues were $12.3 million, up from $11.0 million in the previous year, which equates to a 12.2% increase.

In the nine-month period ending September 30, 2024, service revenues totaled $35.1 million, compared to $31.1 million for the same period in 2023, reflecting a 12.9% rise.

Revenue from joint venture operations

Joint ventures, particularly with Repeat Precision, contribute to NCS Multistage's revenue streams through the sale of frac plugs and perforating guns. The joint venture's operations have increased product sales in the U.S., with total sales from this segment reaching $82.5 million for the nine months ended September 30, 2024.

This partnership has allowed NCSM to enhance its market position and expand its product offerings, which is reflected in the overall growth in revenue from joint venture operations.

Long-term contracts with fixed pricing arrangements

NCS Multistage also engages in long-term contracts that feature fixed pricing arrangements, providing a stable revenue stream over time. The company reported that most of its sales are conducted on a just-in-time basis as specified in individual purchase orders.

The stability provided by these long-term contracts helps mitigate revenue fluctuations associated with market volatility, ensuring consistent income despite varying demand levels.

Revenue Stream	Q3 2024 Revenue	Q3 2023 Revenue	Change (%)
Fracturing Systems & Enhanced Recovery Products	$31.7 million	$27.3 million	+16.1%
Tracer Diagnostics & Related Services	$12.3 million	$11.0 million	+12.2%
Joint Venture Operations (Total)	$82.5 million (9M 2024)	$76.1 million (9M 2023)	+8.3%
Long-term Contracts (Fixed Pricing)	Stable Revenue	Stable Revenue	N/A

Article updated on 8 Nov 2024

Resources:

1. NCS Multistage Holdings, Inc. (NCSM) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of NCS Multistage Holdings, Inc. (NCSM)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View NCS Multistage Holdings, Inc. (NCSM)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.