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What changed in NCS Multistage Holdings, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of NCS Multistage Holdings, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+376 added−343 removedSource: 10-K (2026-03-05) vs 10-K (2025-03-10)

Top changes in NCS Multistage Holdings, Inc.'s 2025 10-K

376 paragraphs added · 343 removed · 276 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

67 edited+11 added−16 removed66 unchanged
Biggest changeWe are currently, and may from time to time in the future be, involved in litigation to determine the enforceability, scope and validity of our patent rights. In addition to patent rights, we employ trade secrets, or “know-how,” and other proprietary information and technology as well as intellectual property licensed from third parties.
Biggest changeIn addition to patent rights, we employ trade secrets, or “know-how,” and other proprietary information and technology as well as intellectual property licensed from third parties. Customers Our customer base primarily consists of oil and natural gas producers in North America and certain international markets as well as oilfield service companies.
We intend to achieve these objectives by (i) pursuing disciplined organic growth to increase our market share with new and existing customers in the United States, Canada and in select international markets, for our existing suite of products and services, (ii) developing and introducing innovative technologies that are aligned with customer needs, (iii) maintaining financial strength and flexibility and (iv) selectively pursuing complementary mergers, acquisitions and joint ventures.
We intend to achieve these objectives by (i) pursuing disciplined organic growth to increase our market share with new and existing customers in the United States, Canada and select international markets, for our existing suite of products and services, (ii) developing and introducing innovative technologies that are aligned with customer needs, (iii) maintaining financial strength and flexibility and (iv) selectively pursuing complementary mergers, acquisitions and joint ventures.
The frac isolation assemblies are usually coiled tubing deployed but can also be deployed on threaded pipe. Our services include operating the downhole frac isolation assemblies and advising customers on optimizing completion designs and field efficiencies. 7 Table of Contents o Casing-installed sliding sleeves.
The frac isolation assemblies are usually coiled tubing deployed but can also be deployed on threaded pipe. Our services include operating downhole frac isolation assemblies and advising customers on optimizing completion designs and field efficiencies. 7 Table of Contents o Casing-installed sliding sleeves.
We own a 50% controlling interest in Repeat Precision, LLC (“Repeat Precision”), which we consolidate. Repeat Precision sells composite and dissolvable frac plugs, setting tools, perforating guns and related products directly to customers and provides high-quality machining services for NCS products. We provide tracer diagnostics services for well completion and reservoir characterization that utilize downhole chemical and radioactive tracers.
We own a 50% controlling interest in Repeat Precision, LLC (“Repeat Precision”), which we consolidate. Repeat Precision sells composite and dissolvable frac plugs, setting tools, perforating guns and related products directly to customers and provides high-quality machining services for NCS products. We provide tracer diagnostics services for well completion and reservoir characterization that utilize downhole chemical tracers.
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. Our extensive research and development efforts are influenced and driven by the needs of our customers, allowing us to introduce innovative and commercial solutions that improve customer efficiency and profitability.
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 and Argentina. Our extensive research and development efforts are influenced and driven by the needs of our customers, allowing us to introduce innovative and commercial solutions that improve customer efficiency and profitability.
Our customers utilize these services to better characterize their assets and to optimize completion designs. Chemical and radioactive tracer studies may provide a cost-effective and reliable means to determine the production profile along a lateral, assess fluid and proppant communication between wells during completions and determine the efficiency of completion designs at the stage and cluster level.
Our customers utilize these services to better characterize their assets and to optimize completion designs. Chemical tracer studies may provide a cost-effective and reliable means to determine the production profile along a lateral, assess fluid and proppant communication between wells during completions and determine the efficiency of completion designs at the stage and cluster level.
We provide our casing buoyancy systems directly to E&P companies as well as to oilfield services companies that act as distributors for this product. Although we do not typically maintain supply or service contracts with our customers, a significant portion of our sales represents recurring business.
We provide our casing buoyancy systems directly to E&P companies as well as to oilfield services companies that act as distributors for this product line. Although we do not typically maintain supply or service contracts with our customers, a significant portion of our sales represents recurring business.
Fracturing systems products and services include our casing-installed sliding sleeves and downhole frac isolation assembly. Customers typically purchase our casing-installed sliding sleeves, consumable products that are typically cemented at intervals into the casing of the wellbore, and may utilize our services, whereby our personnel supervise the use of our downhole frac isolation assembly during completion operations.
Fracturing systems products and services include our casing-installed sliding sleeves and downhole frac isolation assembly. Customers typically purchase our casing-installed sliding sleeves, which are consumable products that are typically cemented at intervals into the casing of the wellbore, and may utilize our services, whereby our personnel supervise the use of our downhole frac isolation assembly during completion operations.
We provide our products and services primarily to 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.
We provide our products and services primarily to E&P companies for use in onshore and offshore wells, predominantly those that have been drilled with horizontal laterals in both unconventional and conventional oil and natural gas formations.
Additionally, E&P companies have become increasingly focused on well productivity through optimization of completion designs and we believe this trend may further the adoption of pinpoint stimulation, and in turn, increase the opportunity for sales of our products and services if our customers observe operational benefits and long-term production results from the application of pinpoint stimulation.
Additionally, E&P companies have become increasingly focused on well productivity through optimization of completion designs, and we believe this trend may further the adoption of pinpoint stimulation, and in turn, increase the opportunity for sales of our products and services when our customers observe operational benefits and long-term production results from the application of pinpoint stimulation.
We also offer products that can be utilized later in a well’s life to allow for selective stage isolation or to enhance injection efficiencies if the well is converted from a production well to an injection well. Our fracturing systems products and services are comprised of our casing-installed sliding sleeves and our downhole frac isolation assemblies.
We also offer products that can be utilized later in the well life cycle to allow for selective stage isolation or to enhance injection efficiencies if the well is converted from a production well to an injection well. Our fracturing systems products and services are comprised of our casing-installed sliding sleeves and our downhole frac isolation assemblies.
We also compete with other suppliers of well construction products, enhanced recovery systems, tracer diagnostics services, composite frac plugs and perforating guns.
We also compete with other suppliers of well construction products, enhanced recovery systems, tracer diagnostics services, composite and dissolvable frac plugs and perforating guns.
Pinpoint stimulation is the process of individually stimulating each entry point into an oil or natural gas formation. We believe that pinpoint stimulation provides benefits compared to traditional completion techniques. Our pinpoint stimulation solutions and refined field processes are designed to enable efficient, controlled, verifiable, and repeatable completions.
Pinpoint stimulation is the process of individually stimulating each entry point into an oil or natural gas formation. We believe that pinpoint stimulation provides benefits compared to competitive completion techniques. Our pinpoint stimulation solutions and refined field processes are designed to enable efficient, controlled, verifiable, and repeatable completions.
Intellectual Property and Patent Protection We have dedicated resources to the development and acquisition of new technology and products designed to optimize well construction, well completions and field development strategies, primarily for use in onshore and offshore wells drilled with horizontal laterals in both unconventional and conventional oil and natural gas formations.
Intellectual Property and Patent Protection We have dedicated resources to the development and acquisition of new technology and products designed to optimize well construction, well completion and field development strategies, primarily for use in onshore and offshore wells drilled with horizontal laterals in both unconventional and conventional oil and natural gas formations.
Item 1. Business Overview NCS Multistage Holdings, Inc. (“NCS,” the “Company,” “we,” “our” or “us”) is 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.
Item 1. Business Overview NCS Multistage Holdings, Inc. (“NCS,” the “Company,” “we,” “our” or “us”) is a leading provider of highly engineered products and support services that facilitate the optimization of oil and natural gas well construction, well completion and field development strategies.
Products and Services We provide highly engineered products and support services that facilitate the optimization of oil and natural gas well construction, well completions and field development strategies. Our key products and services include: ● Fracturing Systems. Our fracturing systems products and services encompass our technology developed to enable efficient pinpoint stimulation, selective stage isolation and re-stimulation strategies.
Products and Services We provide highly engineered products and support services that facilitate the optimization of oil and natural gas well construction, well completion and field development strategies. Our key products and services include: ● Fracturing Systems. Our fracturing systems products and services encompass our technology developed to enable efficient pinpoint stimulation, selective stage isolation and re-stimulation strategies.
We began providing pinpoint stimulation products and services in 2006. 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.
We began providing pinpoint stimulation products and services in 2006. 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 alternative completion techniques.
Adoption of Pinpoint Stimulation Traditional well completion techniques, including plug and perf and ball drop, currently account for the majority of unconventional well completions in North America. We believe that pinpoint stimulation can provide well completion efficiencies and some long-term benefits not observed with traditional well completion techniques.
Adoption of Pinpoint Stimulation Competitive well completion techniques, including plug and perf and ball drop, currently account for the majority of unconventional well completions in North America. We believe that pinpoint stimulation can provide well completion efficiencies and some long-term benefits not observed with competitive well completion techniques.
In Canada, provincial laws also impose joint and several liability on the current and past owners of contaminated sites and on persons who own or have change, management and control of contaminating substances released into the environment. ● Occupational Health and Safety.
In Canada, provincial laws also impose joint and several liability on the current and past owners of contaminated sites and on persons who own or have care, management and control of contaminating substances released into the environment. ● Occupational Health and Safety.
Increasing Well Complexity and Focus on Completion Optimization In recent years, E&P companies have drilled longer horizontal wells and completed more hydraulic fracturing stages per well to maximize the volume of hydrocarbon recoveries per well.
Increasing Well Complexity and Focus on Completion Optimization In recent years, E&P companies have drilled longer horizontal wells and completed more hydraulic fracturing stages per well to maximize the volume of hydrocarbon recovery per well.
In 2024, approximately 60% of our revenue was derived from fracturing systems products and services and enhanced oil recovery systems, approximately 20% was derived from Repeat Precision and approximately 10% was derived from each of our well construction products and tracer diagnostics services.
In 2025, approximately 60% of our revenue was derived from fracturing systems products and services and enhanced oil recovery systems, approximately 20% was derived from Repeat Precision and approximately 10% was derived from each of our well construction products and tracer diagnostics services.
Failure to comply with these laws and regulations may result in the assessment of administrative, civil and criminal penalties, the imposition of remedial or corrective obligations, and the issuance of injunctive relief. 11 Table of Contents We believe that our operations are in substantial compliance with applicable environmental, health and safety laws and regulations.
Failure to comply with these laws and regulations may result in the assessment of administrative, civil and criminal penalties, the imposition of remedial or corrective obligations, and the issuance of injunctive relief. We believe that our operations are in substantial compliance with applicable environmental, health and safety laws and regulations.
“Risk Factors.” Sales and Marketing Our sales and marketing activities are performed through a technically-trained sales force. We recognize the importance of a technical marketing program in demonstrating the advantages of new technologies that offer benefits relative to established industry methodologies.
“Risk Factors.” Sales and Marketing Our sales and marketing activities are performed through a technically-trained sales force. We recognize the importance of a technical marketing program in demonstrating the advantages of our technologies that offer benefits relative to competitive industry methodologies.
In the United States and Canada, sales of our fracturing systems products and services, enhanced recovery systems, liner hangers, toe initiation sleeves and tracer diagnostics services are made directly to E&P companies. Our customers also hire coiled tubing companies and pressure pumping services companies that work alongside us during the completion of a well.
In the United States and Canada, we sell our fracturing systems products and services, enhanced recovery systems, liner hangers, toe initiation sleeves and tracer diagnostics services, directly to E&P companies. Our customers also hire coiled tubing companies and pressure pumping services companies that work alongside us during the completion of a well.
Further, we do not anticipate that compliance with existing environmental, health and safety laws and regulations will have a material effect on our consolidated financial statements. However, laws and regulations protecting the environment, health and safety generally have become more stringent in recent years and could continue to do so.
Further, we do not anticipate that compliance with existing environmental, health and safety laws and regulations will have a material effect on our consolidated financial statements. However, laws and regulations protecting the environment, health and safety generally have become more stringent over time and could continue to do so.
There is no practical limitation on the number of sleeves that can be installed in a well, and all sleeves have an inner diameter that is similar to the casing in the wellbore. Our primary model of sliding sleeves can be opened and closed multiple times throughout the life of a well.
There is no practical limitation on the number of sleeves that can be installed in a well, and all sleeves have an inner diameter that is similar to the casing in the wellbore. Our primary sliding sleeve offering can be opened and closed multiple times throughout the life of a well (“Multicycle sleeves”).
Our suppliers are also active in multiple regions which allows us to better react to changes in foreign currency exchange rates and tariffs and duties. In addition, sourcing certain product categories from Repeat Precision’s manufacturing facility in Mexico has allowed us to reduce our costs.
Our suppliers are active in multiple regions which allows us to better react to changes in foreign currency exchange rates and tariffs and duties. In addition, sourcing certain product categories from Repeat Precision’s manufacturing facility in Mexico, as well as other international suppliers, has allowed us to reduce our costs.
Our ability to grow our market share, as evidenced by the percentage of horizontal wells in North America completed using our products and services, will depend in large part on the industry’s further adoption of pinpoint stimulation, our ability to continue to innovate our technology to compete against technological advances in traditional well completion techniques, and our ability to successfully compete against other providers of pinpoint stimulation products and services, including adjusting our pricing in certain markets to respond to customer demands and to competitors that may provide discounted pricing to our market.
Our ability to grow our market share, as evidenced by the percentage of horizontal wells in North America completed using our products and services, will depend in large part on the industry’s further adoption of pinpoint stimulation, our ability to continue to innovate our technology to compete against technological advances in competitive well completion techniques, and our ability to successfully compete against other providers of pinpoint stimulation products and services which may include adjustments to our pricing in certain markets to respond to customer demands and to competitors that may provide discounted pricing in those markets.
Although it is not possible at this time to predict how any legal requirements imposed following these or subsequent international negotiations or otherwise that may be adopted or issued to address GHG emissions, would impact our business or that of our customers, any such future laws, regulations or legal requirements imposing reporting or permitting obligations on, or limiting emissions of GHGs from, oil and natural gas exploration activities could require our customers to incur costs to reduce emissions of GHGs associated with their operations.
Although it is not possible at this time to predict how any legal requirements imposed following these or subsequent international negotiations or otherwise that may be adopted or issued to address GHG emissions, would impact our business or that of our customers, any such future laws, regulations or legal requirements imposing reporting or permitting obligations on, or limiting emissions of GHGs from, oil and natural gas exploration activities could require our customers to incur costs to reduce emissions of GHGs associated with their operations or lessen demand for their products. 12 Table of Contents ● Non-Hazardous and Hazardous Wastes.
Similar concerns have been raised that hydraulic fracturing may also contribute to seismic activity. At the same time, certain environmental groups have suggested that additional laws may be needed to more closely and uniformly limit or otherwise regulate the hydraulic fracturing process, and legislation has been proposed by some members of Congress to provide for such regulation.
At the same time, certain environmental groups have suggested that additional laws may be needed to more closely and uniformly limit or otherwise regulate the hydraulic fracturing process, and legislation has been proposed by some members of Congress to provide for such regulation.
We provided our products and services to over 200 customers in 2024, 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.
We provided our products and services to more than 230 customers in 2025, including 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.
Although we believe we currently maintain insurance coverage adequate for the risks involved, there is a risk our insurance may not be sufficient to cover any particular loss or that our insurance may not cover all losses. Competition The markets in which we operate are highly competitive.
Although we believe we currently maintain insurance coverage adequate for the risks involved, there is a risk our insurance may not be sufficient to cover any particular loss or that our insurance may not cover all losses, such as losses that may be incurred associated with intellectual property matters. Competition The markets in which we operate are highly competitive.
In addition to the technical marketing effort, we occasionally engage in field trials to demonstrate the economic benefits of our products and services. Seasonality A substantial portion of our business is subject to seasonality, which results in quarterly variability.
In addition to our technical marketing efforts, we engage in customer field trials to demonstrate the economic benefits of our products and services. 10 Table of Contents Seasonality A substantial portion of our business is subject to seasonality, which results in quarterly variability.
Our casing-installed sliding sleeves are consumable products, sold to our customers and integral to a well’s casing. These sliding sleeves can be used in both cemented and open-hole wellbores in vertical, deviated or horizontal wells.
Our casing-installed sliding sleeves are consumable products, sold to our customers as an integral component of the well casing. These sliding sleeves can be used in both cemented and open-hole wellbores in vertical, deviated or horizontal wells.
Most of the components, raw materials and parts that we use in our operations, such as steel in various forms, electronic components, chemicals and elastomers are available from many sources. We generally try to purchase our components, raw materials and parts from multiple suppliers, so we are not dependent on any one supplier.
Most of the components, raw materials and parts that we use in our operations, such as steel in various forms, electronic components, chemicals and elastomers are available from more than one source. We generally purchase our components, raw materials and parts from multiple suppliers, so we are not dependent on a specific supplier.
Repeat Precision sells its high-performance PurpleSeal line of composite and dissolvable frac plugs and bridge plugs, PurpleSet single-use disposable setting tools, FracSure Express systems that combine a PurpleSeal Frac Plug with a single-use disposable setting tool, and related products directly to E&P companies. Repeat Precision also sells PurpleFire perforating guns, devices utilized to perforate a well’s casing.
Repeat Precision sells a high-performance line of PurpleSeal composite and PurpleReign dissolvable frac plugs and bridge plugs, PurpleSet setting tools, FracSure Express systems, which combines a PurpleSeal frac plug with a setting tool, and related products directly to E&P companies. Repeat Precision also sells PurpleFire perforating guns, devices utilized to perforate the well casing.
This trend towards longer and more complex wells has resulted in us selling more sliding sleeves or frac plugs per well on average, which increases our revenue opportunity per well completion and has supported sales of our casing buoyancy systems.
This trend towards longer and more complex wells has provided an opportunity to sell more sliding sleeves or frac plugs per well on average, which increases our potential revenue per completion and supports sales of our casing buoyancy systems.
This portfolio reflects our ongoing efforts to maintain and protect more commercially significant intellectual property while discontinuing maintenance of patents that no longer align with our strategic priorities. Our U.S. and international utility patents both expire between 2030 and 2042. 9 Table of Contents We also have a number of U.S. and international patent applications pending.
We have monetized certain of our patents through licensing agreements and enforcement actions. This portfolio reflects our ongoing efforts to maintain and protect more commercially significant intellectual property while discontinuing maintenance of patents that no longer align with our strategic priorities. Our U.S. and international utility patents both expire between 2030 and 2042.
States and provinces could also elect to prohibit high volume hydraulic fracturing altogether, following the approach taken by the State of New York in 2015 and Quebec in 2013. For example, California banned hydraulic fracturing on state-permitted lands in October 2024.
States and provinces could also elect to prohibit high volume hydraulic fracturing altogether, following the approach taken by the State of New York in 2015 and Quebec in 2013. For example, California banned hydraulic fracturing on state-permitted lands in 2024. Aside from state and provincial laws, local land use restrictions may restrict drilling in general or hydraulic fracturing in particular.
We hold 66 U.S. utility patents and 49 related international utility patents, which relate to various products and services from each of our product lines, such as our casing buoyancy systems, OSTs, casing installed sliding sleeves, frac isolation assemblies, frac plug setting tools and other equipment and methods utilized in the provision of our services.
Our equipment and services involve proprietary technologies, some of which are protected by patents. 9 Table of Contents We hold 63 U.S. utility patents and 63 related international utility patents, which relate to various products and services from each of our product lines, such as our casing buoyancy systems, particulate oil-soluble chemical tracers, casing installed sliding sleeves, frac isolation assemblies, frac plug setting tools and other equipment and methods utilized in the provision of our services.
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.
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, which can result in lower drilling and completion activity during the fourth quarter. Suppliers and Raw Materials We acquire components, raw materials and parts from suppliers, including machine shops.
We sell products for well construction, including our casing buoyancy systems, liner hanger systems and toe initiation sleeves. Our customers utilize these products to safely and efficiently install casing and production liners, facilitate cementing operations and initiate a flow path into the formation at the commencement of stimulation operations.
Our customers utilize these products to safely and efficiently install casing and production liners, facilitate cementing operations and initiate a flow path into the formation at the commencement of stimulation operations.
Our sales and earnings are influenced by our ability to successfully introduce new or improved products to the North American and international markets. Our equipment and services involve proprietary technologies, some of which are protected by patents.
Our sales and earnings are influenced by our ability to successfully introduce new or improved products to the North American and international markets.
Segment and Geographic Information” of our consolidated financial statements. 6 Table of Contents Business Strategy Our business strategy is to increase the adoption of our products and services in the United States, Canada and select international markets, to continue to be an innovator of technology and to create value for our stockholders.
Segment and Geographic Information” of the consolidated financial statements contained herewith. 6 Table of Contents Business Strategy Our business strategy is to promote the adoption of our products and services and expand our footprint in the United States, Canada and select international markets, to commercialize innovative new solutions for our customers and to create value for our stockholders.
International sales are made through local NCS entities or to our local operating partners usually 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.
International sales are made through local NCS entities or to our local operating partners, primarily in the Middle East, usually on a free on board or free carrier basis with a point of sale in the United States, except for inventory held in Saudi Arabia.
Employees As of December 31, 2024, we had 252 employees of which all are full-time employees. As of such date, 133 of our employees were based in the United States, 108 were based in Canada and 11 were based outside of North America.
Employees As of December 31, 2025, we had 272 full-time employees. As of such date, 153 of our employees were based in the United States, 109 were based in Canada and 10 were based outside of North America.
We will generally utilize multiple machine shops for the manufacturing of our component parts so that we are not dependent on any one machine shop. In recent years, we have reduced our internal manufacturing capacity in an effort to reduce fixed costs and have relied more heavily on certain machine shops.
We have historically utilized multiple machine shops for the manufacturing of our component parts to minimize dependency on any particular machine shop. Over time, we have reduced our internal manufacturing capacity in an effort to reduce fixed costs and have relied more heavily on certain machine shops.
Our major competitors for our completion products and services include Baker Hughes Company (“Baker Hughes”), Core Laboratories Inc., DMC Global Inc., Forum Energy Technologies, Inc., Halliburton Company, Innovex International, Inc., Nine Energy Service, Inc., NOV Inc., Oil States International, Inc., Packers Plus Energy Services Inc., SLB, Schoeller-Bleckmann Oilfield Equipment AG and Weatherford International plc as well as a number of smaller or regional competitors.
Our major competitors for our completion products and services include Baker Hughes Company (“Baker Hughes”), Core Laboratories Inc., DMC Global Inc., Forum Energy Technologies, Inc., Halliburton Company, Innovex International, Inc., Nine Energy Service, Inc., NOV Inc., Oil States International, Inc., Packers Plus Energy Services Inc., SLB N.V., SBO AG and Weatherford International plc as well as a number of smaller or regional competitors. 11 Table of Contents We believe that the most significant factors influencing a customer’s decision to utilize our equipment and services are technology, product and service quality, and safety track record.
Also in December 2023, the Canadian federal government announced proposed regulatory amendments to reduce methane emissions in the upstream oil and gas sector by 75% below 2012 levels by 2030. 12 Table of Contents Various U.S. states or groups of states also have adopted or considered adopting legislation, regulations or other governmental actions focused on reducing GHG emissions, including cap and trade programs, carbon taxes, restricting methane emissions from E&P activities, reporting and tracking initiatives and renewable portfolio standards.
For example, various U.S. states or groups of states also have adopted or considered adopting legislation, regulations or other governmental actions focused on reducing GHG emissions, including cap and trade programs, carbon taxes, restricting methane emissions from E&P activities, reporting and tracking initiatives and renewable portfolio standards.
Canadian completions activity can be impacted by wildfires that are usually experienced in the spring and summer seasons, but weather and wildfire conditions in 2024 were favorable compared to 2023. Our business activity can also be affected by customer spending patterns.
Canadian completions activity can be impacted by wildfires that are usually experienced in the spring and summer seasons, as well as shortages of water available to oil and gas operators. Our business activity can also be affected by customer spending patterns.
During completion operations, the downhole frac isolation assembly is located in the sleeve and the inner barrel of the sleeve is shifted down, exposing the frac ports to the formation, allowing the stimulation of that stage to begin. Our multicycle sleeves have an inner barrel that can be shifted up to re-isolate the frac ports.
These closable sleeves provide our customers additional completion or production options to better optimize the overall performance of the well. During completion operations, the downhole frac isolation assembly is located in the sleeve and the inner barrel of the sleeve is shifted down, exposing the frac ports to the formation, allowing the stimulation of that stage to begin.
Due to the U.S. administration’s announced potential tariffs against Mexico, Canada, and China, and these countries’ retaliatory measures, we may experience negative impacts on our input costs. Steel prices, a key component in our fracturing systems and well construction products, could increase. Similarly, chemical prices, used in our tracer diagnostic business, could rise.
Due to the U.S. administration’s current and / or potential tariffs imposed on goods from Mexico, Canada, and China, and these countries’ retaliatory measures, we have experienced and may continue to experience negative impacts on our input costs. The price of steel, for example, a key component used to manufacture our fracturing systems and well construction products, has increased.
The Ratek line of sliding sleeves has been commercialized for more stringent environments, including high torque, high burst and collapse, and high compression environments, features that are required for many offshore applications. We offer Ratek sleeves with ISO V0 and V3 ratings. o Downhole frac isolation assembly.
This line of sleeves comes in standard duty and heavy duty (high pressure and high rate) models. ■ Ratek . The Ratek line of sliding sleeves has been commercialized for more stringent environments, including high torque, high burst and collapse, and high compression environments, features that are required for many offshore applications.
Our five largest customers accounted for approximately 26% and 28% of our revenue for the years ended December 31, 2024 and 2023, respectively. No single customer represented more than 10% of our revenue for the years ended December 31, 2024 and 2023.
For the years ended December 31, 2025 and 2024, we had more than 230 and 200 customers, respectively. Our five largest customers accounted for approximately 33% and 26% of our revenue for the years ended December 31, 2025 and 2024, respectively. For the year ended December 31, 2025, two of our largest customers merged.
Our revenue for the years ended December 31, 2024 and 2023 totaled $162.6 million and $142.5 million, respectively. Our net income (loss) attributable to NCS Multistage Holdings, Inc. for the years ended December 31, 2024 and 2023 totaled $6.6 million and $(3.2) million, respectively.
Our net income attributable to NCS Multistage Holdings, Inc. for the years ended December 31, 2025 and 2024 totaled $23.7 million and $6.6 million, respectively. Our total assets as of December 31, 2025 and 2024 was $181.2 million and $152.8 million, respectively.
Various studies also have been conducted or are currently underway by the EPA, and other federal agencies concerning the potential environmental impacts of hydraulic fracturing activities. State, provincial and federal regulatory agencies have recently focused on a possible connection between the operation of injection wells used for oil and natural gas waste disposal and seismic activity.
State, provincial and federal regulatory agencies have evaluated a possible connection between the operation of injection wells used for oil and natural gas waste disposal and seismic activity. Similar concerns have been raised that hydraulic fracturing may also contribute to seismic activity.
In addition, substantial limitations on GHG emissions could adversely affect demand for the oil and natural gas our customers produce. ● Non-Hazardous and Hazardous Wastes. The Resource Conservation and Recovery Act (“RCRA”) in the United States and CEPA in Canada and comparable state and provincial laws control the management and disposal of hazardous and non-hazardous waste.
The Resource Conservation and Recovery Act (“RCRA”) in the United States and CEPA in Canada and comparable state and provincial laws control the management and disposal of hazardous and non-hazardous waste. These laws and regulations govern the generation, storage, treatment, transfer and disposal of wastes that our customers generate.
Some of these patent applications cover equipment and methods which are currently in development. The applications are in various stages of the patent prosecution process and patents may not be issued on such applications in any jurisdiction for some time, if they are issued at all.
The applications are in various stages of the patent prosecution process and patents may not be issued on such applications in any jurisdiction for some time, if they are issued at all. We believe that our patents have historically improved our ability to compete in the markets we serve, supplying our customers with proprietary products and services.
Aside from state and provincial laws, local land use restrictions may restrict drilling in general or hydraulic fracturing in particular. Municipalities may adopt local ordinances attempting to prohibit hydraulic fracturing altogether or, at a minimum, allow such fracturing processes within their jurisdictions to proceed but regulating the time, place and manner of those processes.
Municipalities may adopt local ordinances attempting to prohibit hydraulic fracturing altogether or, at a minimum, allow such fracturing processes within their jurisdictions to proceed but regulating the time, place and manner of those processes. Various studies also have been conducted by the EPA, and other federal agencies concerning the potential environmental impacts of hydraulic fracturing activities.
These sleeves can often be re-opened or re-closed at any time, allowing our customers to selectively access or isolate segments of the wellbore. Several generations of sliding sleeves have been developed over the years, each providing improvements in functionality and reliability. ■ Innovus .
Our Multicycle sleeves have an inner barrel that can be shifted up to re-isolate the frac ports. These sleeves can often be re-opened or re-closed at any time, allowing our customers to selectively access or isolate segments of the wellbore.
Our international operations, with the exception of our Argentinean and certain North Sea operations, are currently serviced by employees operating out of the United States and Canada. In addition, as of December 31, 2024, our consolidated joint venture, Repeat Precision, had 200 employees, 29 of which are based in the United States and 171 of which are based in Mexico.
In addition, as of December 31, 2025, our consolidated joint venture, Repeat Precision, had 216 employees, 27 of which are based in the United States and 189 of which are based in Mexico.
Repeat Precision sells perforating guns to other oilfield services companies that act as distributors and convey the tools downhole for E&P companies. Repeat Precision also provides high-quality machining services for certain NCS products. ● Tracer Diagnostics. We provide chemical and radioactive tracer diagnostics services used by our customers to assess wellbore clearance, completion performance, well production and well-to-well communication.
Repeat Precision sells perforating guns to other oilfield services companies who serve as distributors which convey the tools downhole for E&P companies. Repeat Precision also provides high-quality machining services for certain NCS products. ● Tracer Diagnostics. We offer a suite of comprehensive chemical tracer diagnostics services, recently expanded through the acquisition of ResMetrics in 2025.
The Innovus line of sliding sleeves is the current generation of our fracturing sleeves designed primarily for the onshore market. This line of sleeves comes in standard duty and heavy duty (high pressure and high rate) models. ■ Ratek .
We have developed several generations of sliding sleeves over the years, each providing improvements in functionality and reliability. ■ Innovus . The Innovus line of sliding sleeves is the current generation of our fracturing sleeves designed primarily for the onshore market.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” for more information. Operating Risks and Insurance We currently carry a variety of insurance for our operations.
We assemble products in the United States and Canada, for which cross-border movement of components, raw materials, parts, and finished products between these jurisdictions could become subject to tariffs. See Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for more information. Operating Risks and Insurance We currently carry a variety of insurance for our operations.
Governmental and public concern over the threat of climate change arising from GHG emissions is resulting in regulatory actions to address climate change in the United States and abroad. As a result, our customers are or may become subject to statutes or regulations aiming to reduce emissions of GHGs.
Governmental and public concern over the threat of climate change arising from GHG emissions has resulted in national, regional, and local regulatory actions to address or mitigate the impact of climate change.
We believe that our patents have historically been important in enabling us to compete in the market to supply our customers with our products and services. When commercially advisable, we intend to enforce, and have in the past vigorously enforced, our intellectual property rights.
When commercially advisable, we intend to enforce, and have in the past vigorously enforced, our intellectual property rights. We are currently, and may from time to time in the future be, involved in litigation to determine the enforceability, scope and validity of our patent rights.
Our total assets as of December 31, 2024 and 2023 totaled $152.8 million and $152.0 million, respectively. For additional financial information by geographic area, see “Note 3.
For the years ended December 31, 2025 and 2024, respectively, Canada represented approximately 58% and 63% of our revenue, the United States approximately 32% and 27%, and international markets approximately 10% and 10%. For additional financial information by geographic area, see “Note 4.
Removed
These closable sleeves provide our customers the benefit of additional completion or production options and the ability to better optimize a well’s overall performance.
Added
On July 31, 2025, we acquired Reservoir Metrics, LLC, and its related entities (“ResMetrics”), expanding our tracer diagnostics capabilities with advanced reservoir diagnostics technologies and a complementary customer base. We sell products for well construction, including our casing buoyancy systems, liner hanger systems and toe initiation sleeves as well as certain complementary products provided by third parties.
Removed
Our technology includes fracture fluid identifier tracers (“FFIs”), particulate water-soluble tracers (“WSTs”), particulate oil-soluble tracers (“OSTs”) and reservoir natural gas tracers (“RGTs”), which enable efficient, cost-effective downhole diagnostics, providing E&P companies with critical reports and data to better optimize field and reservoir development and production/injection performance. ● Well Construction.
Added
A significant portion of our revenue is derived from consumable products and related services that are directly linked to completion and production activity. Our revenue for the years ended December 31, 2025 and 2024 totaled $183.6 million and $162.6 million, respectively.
Removed
Customers Our customer base primarily consists of oil and natural gas producers in North America and certain international markets as well as oilfield service companies. For the years ended December 31, 2024 and 2023, we had over 200 and 225 customers, respectively.
Added
Although we believe the technical benefits of adopting pinpoint stimulation improves efficiencies for our customers, Repeat Precision provides us with the opportunity to serve customers who continue to use the competitive plug and perf completion techniques.
Removed
As a result, while the impact was less pronounced at the end of 2024 compared to recent years, we typically experience reduced customer activity during the end of the year. 10 Table of Contents Suppliers and Raw Materials We acquire components, raw materials and parts from suppliers, including machine shops.
Added
We offer Ratek sleeves with ISO V0 and V3 ratings. o Downhole frac isolation assembly.
Removed
Additionally, our supply chain faces tariff exposure as Repeat Precision manufactures its composite and dissolvable frac plugs and certain NCS fracturing system components in Mexico. Also, we assemble products in the United States and Canada, for which cross-border movement of components, raw materials, parts, and finished products between these jurisdictions may become subject to tariffs. See Item 7.
Added
Our tracer diagnostics services are utilized by E&P companies to evaluate wellbore clearance, completion effectiveness, production performance, and inter-well communication. The technology portfolio features water, oil, and gas-soluble tracers that facilitate efficient and cost-effective downhole diagnostics.
Removed
We believe that the most significant factors influencing a customer’s decision to utilize our equipment and services are technology, service quality, safety track record, and price.
Added
We provide customers with essential services to improve production and injection performance, as well as diagnostic reports and data to optimize field and reservoir development. ● Well Construction.
Removed
In December 2009, the EPA determined that emissions of carbon dioxide, methane and other GHGs present an endangerment to public health and the environment because emissions of such gases are, according to the EPA, contributing to warming of the earth’s atmosphere and other climatic changes.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

115 edited+37 added−25 removed220 unchanged
Biggest changeRisks Related to Our Business and the Oil and Natural Gas Industry ● Our business depends on the levels of expenditures by companies in the oil and natural gas industry and particularly on the level of E&P activity in Canada, the United States and internationally. ● The cyclicality of the oil and natural gas industry may cause our results of operations to fluctuate. ● Competition within our industry may adversely affect our ability to market our services. ● We may not be able to successfully implement our strategy of increasing sales of our products and services for use in the United States or select international markets. ● The loss of any of our significant customers, or their failure to pay the amounts they owe us, could cause our revenue and cash flow to decline substantially. ● The products and services we provide are used in operations that are subject to potential hazards inherent in the oil and natural gas industry, including as a result of the use of explosive materials in our manufacturing processes and products, and, as a result, we are exposed to potential liabilities that may affect our financial condition and reputation. ● Losses and liabilities from our operations could have a material adverse effect on our business, financial condition and results of operations. ● Policy changes affecting international trade, including the potential imposition of new or increased tariffs, could adversely impact our business. ● We are exposed to counterparty credit risk. ● The growth of our business through acquisitions or strategic partnerships exposes us to various risks, including identifying suitable opportunities and integrating businesses, assets and personnel. ● We may be adversely affected by the effects of inflation or negatively impacted by currency fluctuations as a significant amount of our revenue generated is denominated in CAD. ● Disruptions or delays involving our suppliers or increases in prices for the components, raw materials and parts that we obtain from our suppliers could have an adverse effect on our business. ● Our success may depend on the continued service and availability of key personnel, including attracting and retaining skilled and technically knowledgeable employees. 15 Table of Contents ● Our operations may be limited or disrupted during severe weather conditions. ● We may hold excess or obsolete inventory or have insufficient inventory. ● Our operations and our customers’ operations are subject to a variety of governmental laws and regulations.
Biggest changeRisks Related to Our Business and the Oil and Natural Gas Industry ● Our business depends on the levels of expenditures by companies in the oil and natural gas industry and particularly on the level of E&P activity in Canada, the United States and internationally. ● The cyclicality of the oil and natural gas industry may cause our results of operations to fluctuate. ● Competition within our industry may adversely affect our competitive position and profitability. ● We may not be able to successfully implement our strategy of increasing sales of our products and services for use in the United States or select international markets. ● The loss of any of our significant customers, or their failure to pay the amounts they owe us, could cause our revenue and cash flow to decline substantially. ● Losses and liabilities from our operations could have a material adverse effect on our business, financial condition and results of operations. ● We could be subject to additional income tax liabilities. ● Policy changes affecting international trade, including the potential imposition of new or increased tariffs, could adversely impact our business. ● We are exposed to counterparty credit risk. ● The growth of our business through acquisitions or strategic partnerships exposes us to various risks, including identifying suitable opportunities and integrating businesses, assets and personnel. ● We may be adversely affected by the effects of inflation or negatively impacted by currency fluctuations as a significant amount of our revenue is generated in Canada and denominated in Canadian dollars (“CAD”). ● Disruptions or delays involving our suppliers or increases in prices for the components, raw materials and parts that we obtain from our suppliers could have an adverse effect on our business. ● Our success may depend on the continued service and availability of key personnel, including attracting and retaining skilled and technically knowledgeable employees. 15 Table of Contents ● Our operations may be limited or disrupted during severe weather conditions. ● The products and services we provide are used in operations that are subject to potential hazards inherent in the oil and natural gas industry, including as a result of the use of explosive materials in our manufacturing processes and products, and, as a result, we are exposed to potential liabilities that may affect our financial condition and reputation. ● We may hold excess or obsolete inventory or have insufficient inventory. ● Our operations and our customers’ operations are subject to a variety of governmental laws and regulations.
Any nonperformance by these customers, including their failure to pay the amounts they owe us, either as a result of changes in general financial and economic conditions, conditions in the oil and natural gas industry or otherwise, could have a material adverse effect on our business, financial condition and results of operations.
Any nonperformance by these customers, including their failure to pay the amounts they owe us, either as a result of changes in general financial and economic conditions in the oil and natural gas industry or otherwise, could have a material adverse effect on our business, financial condition and results of operations.
In addition, business acquisitions and strategic partnerships involve a number of risks that could affect our business, financial condition and results of operations, including but not limited to: ● our ability to integrate or implement operational, accounting and technology policies, processes and systems; ● our ability to integrate personnel and human resources systems as well as the cultures of each of the acquired businesses; ● our ability to implement our business plan for the acquired business; ● transition of operations, users and customers to our existing platforms or the integration of data, systems and technology platforms with ours; ● compliance with regulatory requirements and avoiding potential conflicts of interest in markets that we serve; ● diversion of management’s attention and other resources; ● our ability to retain or replace key personnel; ● our ability to maintain relationships with the customers of the acquired business or a strategic partner and further develop the acquired business or the business of our strategic partner; ● our ability to cross-sell our products and services and products and services of the acquired businesses or strategic partners to our respective customers; ● entry into unfamiliar markets; ● assumption of unanticipated legal or financial liabilities and/or negative publicity related to prior acts by the acquired entity; ● litigation or other claims in connection with the acquired company, including claims from terminated employees, customers, former stockholders or third parties; 24 Table of Contents ● misuse of intellectual property by our strategic partners; ● disagreements with strategic partners or a misalignment of incentives within any strategic partnership; ● becoming subject to increased regulation as a result of an acquisition; ● becoming significantly leveraged as a result of incurring debt to finance an acquisition; ● unanticipated operating, accounting or management difficulties in connection with the acquired entities; and ● impairment of acquired intangible assets, including goodwill, and dilution to our earnings per share.
In addition, business acquisitions and strategic partnerships involve a number of risks that could affect our business, financial condition and results of operations, including but not limited to: ● our ability to integrate or implement operational, accounting and technology policies, processes and systems; ● our ability to integrate personnel and human resources systems as well as the cultures of each of the acquired businesses; ● our ability to implement our business plan for the acquired business; ● transition of operations, users and customers to our existing platforms or the integration of data, systems and technology platforms with ours; ● compliance with regulatory requirements and avoiding potential conflicts of interest in markets that we serve; ● diversion of management’s attention and other resources; ● our ability to retain or replace key personnel; ● our ability to maintain relationships with the customers of the acquired business or a strategic partner and further develop the acquired business or the business of our strategic partner; ● our ability to cross-sell our products and services and products and services of the acquired businesses or strategic partners to our respective customers; ● entry into unfamiliar markets; ● assumption of unanticipated legal or financial liabilities and/or negative publicity related to prior acts by the acquired entity; 24 Table of Contents ● litigation or other claims in connection with the acquired company, including claims from terminated employees, customers, former stockholders or third parties; ● misuse of intellectual property by our strategic partners; ● disagreements with strategic partners or a misalignment of incentives within any strategic partnership; ● becoming subject to increased regulation as a result of an acquisition; ● becoming significantly leveraged as a result of incurring debt to finance an acquisition; ● unanticipated operating, accounting or management difficulties in connection with the acquired entities; and ● impairment of acquired intangible assets, including goodwill, and dilution to our earnings per share.
Restrictions on the oil and natural gas operations of our customers to protect wildlife and their habitat could reduce demand for our products and services, which could have a material adverse effect on our business, financial condition and results of operations. 36 Table of Contents We may not be able to meet applicable regulatory requirements for our use of certain chemicals by our tracer diagnostics business, and, even if requirements are met, complying on an ongoing basis with the numerous regulatory requirements may be time-consuming and costly.
Restrictions on the oil and natural gas operations of our customers to protect wildlife and their habitat could reduce demand for our products and services, which could have a material adverse effect on our business, financial condition and results of operations. 36 Table of Contents We may not be able to meet applicable regulatory requirements for the use of certain chemicals by our tracer diagnostics business, and, even if requirements are met, complying on an ongoing basis with the numerous regulatory requirements may be time-consuming and costly.
The loss of key partners or their failure to effectively manage customer relationships or local laws or regulations could adversely affect our ability to compete in these markets and our business. International customers more often require compliance with stringent industrial code requirements, such as API and ISO or similar certifications for our processes and facilities.
The loss of key partners, or their failure to effectively manage customer relationships or to comply with local laws or regulations, could adversely affect our ability to compete in these markets, and our business. International customers more often require compliance with stringent industrial code requirements, such as API and ISO or similar certifications for our processes and facilities.
This is particularly relevant for our manufacturing activities in Mexico through Repeat Precision, certain chemicals utilized in our tracer diagnostics business that we source from China, and steel and steel-based components used in our products. Steel prices and availability are especially susceptible to trade actions involving China, a significant global producer and exporter of steel.
This is particularly relevant for our manufacturing service activities in Mexico through Repeat Precision, certain chemicals utilized in our tracer diagnostics business that we source from China, and steel and steel-based components used in our products. Steel prices and availability are especially susceptible to trade actions involving China, a significant global producer and exporter of steel.
The competitive landscape may be further intensified by industry consolidation, which can reduce our addressable market and strengthen larger competitors. In Canada, where we have an established presence, particularly in fracturing systems, we face ongoing competitive pressures. Local competitors have tried to compete on price, particularly in shallow, less technically demanding applications.
The competitive landscape may be further intensified by industry consolidation, which can reduce our addressable market and strengthen larger competitors. In Canada, where we have an established presence, particularly in fracturing systems, we face ongoing competitive pressures. Local competitors have tried to compete on price, particularly in less technically demanding applications.
For instance, the State of New York elected in 2015 to prohibit high volume hydraulic fracturing altogether and California banned hydraulic fracturing on state-permitted lands in October 2024. Any increased regulation of hydraulic fracturing could reduce our customers’ demand for our products and services and have a material adverse effect on our business, financial condition and results of operations.
For instance, the State of New York elected in 2015 to prohibit high volume hydraulic fracturing altogether and California banned hydraulic fracturing on state-permitted lands in 2024. Any increased regulation of hydraulic fracturing could reduce our customers’ demand for our products and services and have a material adverse effect on our business, financial condition and results of operations.
Our outstanding indebtedness, and any additional indebtedness we incur, may have important consequences for us, including, without limitation, that: we may be required to use a substantial portion of our cash flow to pay the principal of and interest on our indebtedness; our indebtedness and leverage may increase our vulnerability to adverse changes in general economic and industry conditions, as well as to competitive pressures; our ability to obtain additional financing for working capital, capital expenditures, acquisitions and for general corporate and other purposes may be limited; our indebtedness may expose us to the risk of increased interest rates because our borrowings are at variable rates of interest; our indebtedness may prevent us from taking advantage of business opportunities as they arise or successfully carrying out our plans to expand our business; and our flexibility in planning for, or reacting to, changes in our business and our industry may be limited by covenants in our indebtedness documents.
Any additional indebtedness we may incur may have consequences for us, including, without limitation, that: we may be required to use a substantial portion of our cash flow to pay the principal of and interest on our indebtedness; our indebtedness and leverage may increase our vulnerability to adverse changes in general economic and industry conditions, as well as to competitive pressures; our ability to obtain additional financing for working capital, capital expenditures, acquisitions and for general corporate and other purposes may be limited; our indebtedness may expose us to the risk of increased interest rates because our borrowings are at variable rates of interest; our indebtedness may prevent us from taking advantage of business opportunities as they arise or successfully carrying out our plans to expand our business; and our flexibility in planning for, or reacting to, changes in our business and our industry may be limited by covenants in our indebtedness documents.
Our operations may be limited or disrupted in certain parts of the continental United States, Canada and the North Sea during severe weather conditions, particularly, including severe winters or wildfires, which could have a material adverse effect on our business, financial condition and results of operations.
Our operations may be limited or disrupted in certain parts of the continental United States, Canada and the North Sea during severe weather conditions, including severe winters or wildfires, which could have a material adverse effect on our business, financial condition and results of operations.
Demand for our products and services depends substantially on the level of expenditures by companies in the oil and natural gas industry. These expenditures are generally dependent on our customers’ views of future oil and natural gas prices and are sensitive to our customers’ views of future economic growth and the resulting impact on demand for oil and natural gas.
Demand for our products and services depends substantially on the level of expenditures by companies in the oil and natural gas industry. These expenditures are generally dependent on our customers’ views of future oil and natural gas prices and are sensitive to their views of future economic growth and the resulting impact on demand for oil and natural gas.
The chemicals that we use in our tracer diagnostics business may be subject to government regulation in our target markets. In the United States, the EPA administers the TSCA which regulates the commercial registration, distribution, and use of many chemicals, including many of the chemicals we use in our tracer diagnostics business.
The chemicals that we use in our tracer diagnostics business may be subject to government regulation in our target markets. In the United States, the EPA administers the TSCA which regulates the commercial registration, distribution, and use of many chemicals, including many of the chemicals used in our tracer diagnostics business.
At the international level, at the COP28 climate summit in December 2023, nearly 200 countries agreed to transition away from fossil fuels in energy systems so as to achieve net zero by 2050.
At the international level, at the COP28 climate summit in December 2023, representatives from nearly 200 countries agreed to transition away from fossil fuels in energy systems so as to achieve net zero by 2050.
In addition, our international operations and global expansion strategy are subject to general risks related to such operations, including: ● political, social and economic instability and disruptions; ● export controls, economic sanctions, embargoes, import controls, duties and tariffs, and other trade restrictions; ● limitations on ownership and on repatriation or dividend of earnings; ● transportation delays and interruptions; ● labor unrest and current and changing regulatory environments; ● increased compliance costs, including costs associated with disclosure requirements and related due diligence; ● difficulties in staffing and managing multi-national operations; ● limitations on our ability to enforce legal rights and remedies; and ● fluctuations in foreign currency exchange rates.
In addition, our international operations and global expansion strategy are subject to general risks related to such operations, including: ● political, social and economic instability and disruptions; ● export controls, economic sanctions, embargoes, import controls, duties and tariffs, and other trade restrictions; ● limitations on ownership, dividends and repatriation of earnings; ● transportation delays and interruptions; ● labor unrest and current and changing regulatory environments; ● increased compliance costs, including costs associated with disclosure requirements and related due diligence; ● difficulties in staffing and managing multi-national operations; ● limitations on our ability to enforce legal rights and remedies; and ● fluctuations in foreign currency exchange rates.
Risks inherent to these applications, such as equipment malfunctions and failures, equipment misuse and defects, explosions, blowouts and uncontrollable flows of oil, natural gas or well fluids and natural disasters can cause personal injury, loss of life, suspension of operations, damage to formations, damage to facilities, business interruption and damage to or destruction of property, surface water and drinking water resources, equipment and the environment.
Risks inherent to these applications, such as equipment malfunctions and failures, equipment misuse and defects, explosions, blowouts and uncontrollable flows of oil, natural gas or well fluids and natural disasters can cause personal injury, loss of life, suspension of operations, damage to formations, damage to facilities, business interruption and damage to or destruction of property, surface water and drinking water resources, equipment and the environment, as well as reputational harm.
Noncompliance with the EPA approval could result in civil or criminal penalties and delays, or require us to cease operations that are authorized under the approval.
Noncompliance with the EPA approval could result in civil or criminal penalties and delays, or require us to cease operations that are otherwise authorized under the approval.
Changes in trade policies, including the potential imposition of new or increased tariffs, could negatively impact our business, financial condition and results of operations. The possibility of significant changes to U.S. trade policies, particularly regarding the announced potential tariffs against imports from China, Canada, Mexico and other trading partners, creates uncertainty for our business.
Changes in trade policies, including the current tariffs and potential imposition of new or increased tariffs, could negatively impact our business, financial condition and results of operations. The possibility of significant changes to U.S. trade policies, particularly regarding tariffs against imports from China, Canada, Mexico and other trading partners, creates uncertainty for our business.
If we cannot develop targeted strategies to incorporate these technologies in a cost-effective manner while managing implementation risks, or if our competitors deploy these technologies more comprehensively, our competitive position and financial results could be materially adversely affected. Complications with our ERP system could adversely impact our business and operations.
If we cannot develop targeted strategies to incorporate these technologies in a cost-effective manner while managing implementation risks, or if our competitors deploy these technologies more effectively, our competitive position and financial results could be materially adversely affected. Complications with our ERP system could adversely impact our business and operations.
Various U.S. states or groups of states also have adopted or considered adopting legislation, regulations or other governmental actions focused on reducing GHG emissions, including cap and trade programs, carbon taxes, restricting methane emissions from E&P activities, reporting and tracking initiatives and renewable portfolio standards.
For example, various U.S. states or groups of states also have adopted or considered adopting legislation, regulations or other governmental actions focused on reducing GHG emissions, including cap and trade programs, carbon taxes, restricting methane emissions from E&P activities, reporting and tracking initiatives and renewable portfolio standards.
Summary of Significant Accounting Policies” and “Note 8. Goodwill and Identifiable Intangibles” of our consolidated financial statements for further information. We are unable to predict whether impairments of one or more of our long-lived assets or investments may occur in the future.
Summary of Significant Accounting Policies” and “Note 9. Goodwill and Identifiable Intangibles” of our consolidated financial statements for further information. We are unable to predict whether impairments of one or more of our long-lived assets or investments may occur in the future.
Likewise, if we do not prevail in the lawsuits initiated by us, it could impact the strength or validity of the patents in question and decrease our competitive advantage in the market that was protected by the patent. For example, as described in “Note 11.
Likewise, if we do not prevail in the lawsuits initiated by us, it could impact the strength or validity of the patents in question and decrease our competitive advantage in the market that was protected by the patent. For example, as described in “Note 12.
In many circumstances, it has been and may continue to be difficult convincing potential customers of the benefits of our technologies relative to traditional well completion techniques, whether it be for more specific targeted uses or widespread adoption.
In many circumstances, it has been and may continue to be difficult convincing potential customers of the benefits of our technologies relative to other well completion techniques, whether it be for more specific targeted uses or widespread adoption.
Although it is not possible at this time to predict how any legal requirements imposed following these or subsequent international negotiations or otherwise that may be adopted or issued to address GHG emissions would impact our business or that of our customers, any such future laws, regulations or legal requirements imposing reporting or permitting obligations on, or limiting emissions of GHGs from, oil and natural gas exploration activities could require our customers to incur costs to reduce emissions of GHGs associated with their operations.
Although it is not possible at this time to predict how any legal requirements imposed following these or subsequent international negotiations or otherwise that may be adopted or issued to address GHG emissions, would impact our business or that of our customers, any such future laws, regulations or legal requirements imposing reporting or permitting obligations on, or limiting emissions of GHGs from, oil and natural gas exploration activities could require our customers to incur costs to reduce emissions of GHGs associated with their operations or lessen demand for their products.
We conduct a portion of our operations through the Repeat Precision joint venture and may also enter into other joint venture arrangements in the future. Our joint venture arrangements may involve risks not otherwise present when operating assets directly.
We conduct a portion of our operations through the Repeat Precision joint venture and may also enter into other joint venture arrangements in the future. Our joint venture arrangements may involve risks that are not otherwise present when operating assets directly.
Factors affecting the trading price of our common stock could include: ● market conditions in the broader stock market; ● actual or anticipated variations in our quarterly financial and operating results; ● developments in the oil and natural gas industry in general or in the oil and natural gas services market in particular; ● variations in operating results of similar companies; ● introduction of new services by us, our competitors or our customers; ● issuance of new, negative or changed securities analysts’ reports, recommendations or estimates; ● a decline in the number of securities analysts covering our company; ● investor perceptions of us and the industries in which we or our customers operate, including perceptions of our ESG attributes; ● sales, or anticipated sales, of our stock, including sales by our officers, directors and significant stockholders; ● additions or departures of key personnel; 39 Table of Contents ● regulatory or political developments; ● the public’s response to press releases or other public announcements by us or third parties, including our filings with the SEC; ● announcements, media reports or other public forum comments related to litigation, claims or reputational charges against us; ● guidance, if any, that we provide to the public, any changes in this guidance or our failure to meet this guidance; ● the sustainability of an active trading market for our common stock; ● investor perceptions of the investment opportunity associated with our common stock relative to other investment alternatives; ● other events or factors, including those resulting from system failures and disruptions, wildfires, floods, droughts, earthquakes, hurricanes, war, acts of terrorism, other natural disasters or responses to these events; ● changes in accounting principles; ● share-based compensation expense under applicable accounting standards; ● litigation and governmental investigations; and ● changing economic conditions.
Factors affecting the trading price of our common stock could include: ● market conditions in the broader stock market; ● actual or anticipated variations in our quarterly financial and operating results; ● developments in the oil and natural gas industry in general or in the oil and natural gas services market in particular; ● variations in operating results of similar companies; ● introduction of new services by us, our competitors or our customers; ● issuance of new, negative or changed securities analysts’ reports, recommendations or estimates; ● a decline in the number of securities analysts covering our company; ● investor perceptions of us and the industries in which we or our customers operate, including perceptions of our environmental, social and governance (“ESG”) attributes; ● sales, or anticipated sales, of our stock, including sales by our officers, directors and significant stockholders; ● additions or departures of key personnel; 39 Table of Contents ● regulatory or political developments, including changes to or enactment of new tax laws or interpretations thereof; ● the public’s response to press releases or other public announcements by us or third parties, including our filings with the SEC; ● announcements, media reports or other public forum comments related to litigation, claims or reputational charges against us; ● guidance, if any, that we provide to the public, any changes in this guidance or our failure to meet this guidance; ● the sustainability of an active trading market for our common stock; ● investor perceptions of the investment opportunity associated with our common stock relative to other investment alternatives; ● other events or factors, including those resulting from system failures and disruptions, wildfires, floods, droughts, earthquakes, hurricanes, war, acts of terrorism, other natural disasters or responses to these events; ● changes in accounting principles; ● share-based compensation expense under applicable accounting standards; ● litigation and governmental investigations; and ● changing economic conditions.
Any number of factors, including labor disruptions, military activity, catastrophic weather events, the occurrence of a pandemic or other widespread illness, contractual or other disputes, unfavorable economic or industry conditions, transportation disruptions, delivery delays or other performance problems or financial difficulties or solvency problems, have from time to time, and could in the future disrupt our suppliers’ operations and performance, which could, in turn, lead to uncertainty in our supply chain or cause supply disruptions for us and disrupt our operations.
Any number of factors, including labor disruptions, military activity, catastrophic weather events, the occurrence of a pandemic or other widespread illness, contractual or other disputes, unfavorable economic or industry conditions, transportation disruptions, delivery delays or other performance problems or financial difficulties or solvency problems, have from time to time, and could in the future, disrupt our suppliers’ operations and performance, which could, in turn, lead to uncertainty in our supply chain or cause supply disruptions that impact our operations.
In this report, the EPA found scientific evidence that hydraulic fracturing activities can impact drinking water resources under some circumstances. Other governmental agencies, including the U.S. Department of Energy, the U.S. Geological Survey and the U.S. Government Accountability Office, have evaluated or are evaluating various other aspects of hydraulic fracturing.
In this report, the EPA found scientific evidence that hydraulic fracturing activities can impact drinking water resources under some circumstances. Other governmental agencies, including the U.S. Department of Energy, the U.S. Geological Survey and the U.S. Government Accountability Office, have evaluated various other aspects of hydraulic fracturing.
Our business and our customers’ businesses may be significantly affected by: ● federal, state and local and non-U.S. laws and other regulations relating to import tariffs, oilfield operations, employment, labor, worker safety and protection of the environment; ● changes in these laws and regulations; and ● the level of enforcement of these laws and regulations.
Our business and our customers’ businesses may be significantly affected by: ● federal, state and local and non-U.S. laws and other regulations relating to import tariffs, oilfield operations, employment, labor, worker safety, data privacy and cybersecurity, and protection of the environment; ● changes in these laws and regulations; and ● the level of enforcement of these laws and regulations.
Loss of, or interruption to, our information and computer systems could adversely affect our business. We are heavily dependent on our information systems and computer-based programs, including our engineering information and accounting data.
Loss of, or interruption to, our information and computer systems could adversely affect our business. We are heavily dependent on our information systems and computer-based programs, including our ERP system, engineering information and accounting data.
Additionally, retaliatory actions by U.S. trading partners could result in increases in the price of our products or limit our access to certain markets, including Canada.
Additionally, retaliatory actions by U.S. trading partners could result in increases in the cost of our products or limit our access to certain markets, including Canada.
The growth of our business through acquisitions or strategic partnerships exposes us to various risks, including identifying suitable opportunities and integrating businesses, assets and personnel. We evaluate and pursue acquisitions on a regular basis in order to expand and diversify our business.
The growth of our business through acquisitions or strategic partnerships exposes us to various risks, including identifying suitable opportunities, selecting appropriate targets, and integrating businesses, assets and personnel. We evaluate and pursue acquisitions on a regular basis in order to expand and diversify our business.
These advantages may allow them to: ● invest more heavily in new technology development and digital solutions, including AI and machine learning capabilities; ● offer integrated service packages and volume discounts or below-market prices; ● invest in capital intensive expenditures and maintain larger equipment inventories and geographic footprints; and ● better withstand industry downturns through greater financial flexibility.
These advantages may allow them to: ● invest more heavily in new technology development and digital solutions, including AI and machine learning capabilities; ● offer integrated service packages and volume discounts or below-market prices; ● invest in capital intensive expenditures and maintain larger equipment inventories and geographic footprints; and ● better withstand industry downturns.
Disruptions in operations or damages to a location where we or our vendors manufacture and assemble our products could reduce our ability to produce products and satisfy customer demand.
Disruptions in operations or damage to a location where we or our vendors manufacture and assemble our products could reduce our ability to produce products and satisfy customer demand.
In addition, despite our intention to generally allocate risk under contracts, we might not have any contract arrangement which allocates responsibility or may operate under more onerous terms and conditions proposed by the customer.
In addition, despite our intention to generally allocate risk under contracts, we might not have any contractual arrangement which allocates responsibility, or the contract may require more onerous terms and conditions proposed by the customer.
We cannot assure you that our products or facilities will be able to satisfy the specifications or requirements, or that we will be able to perform the full-scale testing necessary to prove that the product specifications are satisfied in future contract bids or under existing contracts, or that the costs of modifications to our products or facilities to satisfy the specifications and testing will not adversely affect our results of operations.
We cannot provide assurance that our products or facilities will be able to satisfy the specifications or requirements, or that we will be able to perform the full-scale testing necessary to prove that the product specifications are satisfied in future contract bids or under existing contracts, or that the costs of modifications to our products or facilities to satisfy the specifications and testing will not adversely affect our results of operations.
For additional information on our cybersecurity and information technology systems, see Item 1C. “Cybersecurity” below. Emerging AI and machine learning technologies could disrupt our business model and competitive position. The oil and gas industry is increasingly adopting AI and machine learning technologies to optimize operations, improve efficiency, and reduce costs.
For additional information on our cybersecurity and information technology systems, see Item 1C. “Cybersecurity” below. 33 Table of Contents Emerging AI and machine learning technologies could disrupt our business model and competitive position. The oil and gas industry is increasingly adopting AI and machine learning technologies to optimize operations, improve efficiency, and reduce costs.
Any significant loss of market share or inability to maintain pricing could materially impact our revenue, margins, and cash flows. 19 Table of Contents We may not be able to successfully implement our strategy of increasing sales of our products and services for use in the United States or select international markets.
Any significant loss of market share or inability to maintain pricing could materially affect our revenue, operating margins, and cash flow. 19 Table of Contents We may not be able to successfully implement our strategy of increasing sales of our products and services for use in the United States or select international markets.
In the United States and international markets, we have been selling our products and services for a shorter period of time and thus must convince potential customers of the value of the emerging technology compared to traditional methods or, in the case of more mature technology offerings, our differentiated benefits.
In the United States and international markets, we have been selling our products and services for a shorter period of time and thus must convince potential customers of the value of emerging technologies compared to other completion methods or, in the case of more mature technology offerings, demonstrate our differentiated benefits.
We procure some of the raw materials and components that we use to create our products directly or indirectly from outside of the United States. Any substantial increase in tariffs could materially increase our costs, disrupt our supply chain, or require us to find alternative suppliers.
We procure some of the raw materials and components that we use to create our products directly or indirectly from outside of the United States. Any substantial increase in tariffs could materially increase our costs, disrupt our supply chain, or require us to find alternative suppliers on potentially less favorable terms.
We also face cybersecurity risks from our suppliers, particularly tier 1 and key suppliers, as our operations and business continuity depend on the security of their systems. A cyber incident at a critical supplier could disrupt our supply chain, production, or operations, and ultimately impact our financial performance.
We also face cybersecurity risks from our suppliers, particularly tier 1 and key suppliers, as our operations and business continuity depend on the security of their systems. A cyber incident at a critical supplier could disrupt our supply chain, production, or operations, and materially impact our business, financial condition and results of operations.
Our effective tax rates could be affected by numerous factors, such as intercompany transactions, the relative amount of our foreign earnings, including lower than anticipated earnings in jurisdictions where we have lower statutory tax rates and higher than anticipated earnings in jurisdictions where we have higher statutory tax rates, losses incurred in jurisdictions for which we are not able to realize the related tax benefit, changes in foreign currency exchange rates, entry into new businesses and geographies, changes to our existing businesses and operations, acquisitions (including integrations) and investments and how they are financed, changes in our deferred tax assets and liabilities and their valuation, and changes in the relevant tax, accounting, and other laws, regulations, administrative practices, principles, and interpretations.
Our effective tax rates could be affected by numerous factors, such as intercompany transactions, the relative amount of our foreign earnings, including lower than anticipated earnings in jurisdictions where we have lower statutory tax rates and higher than anticipated earnings in jurisdictions where we have higher statutory tax rates, changes in foreign currency exchange rates, entry into new businesses and geographies, changes to our existing businesses and operations, acquisitions (including integrations) and investments and how they are financed, changes in our deferred tax assets and liabilities and their valuation, and changes in the relevant tax, accounting, and other laws, regulations, administrative practices, principles, and interpretations.
For example, as a majority of our sliding sleeves sold in Canada are assembled in the United States, retaliatory tariffs implemented by Canada on goods entering from the United States could increase our product costs in Canada.
For example, as a majority of our sliding sleeves sold in Canada are assembled in the United States, retaliatory tariffs implemented by Canada on goods entering from the United States could increase our costs and reduce our competitiveness.
Our contracts with customers and customer requests for bids may set forth detailed specifications or technical requirements (including that they meet certain industrial code requirements, such as API, ASME or similar codes, or that our processes and facilities maintain ISO or similar certifications) for our products and services, which may also include extensive testing requirements.
Our contracts with customers and customer requests for bids may set forth detailed specifications or technical requirements, such as compliance with certain industrial code requirements including API, ASME or similar codes, or that our processes and facilities maintain ISO or similar certifications) for our products and services, which may require extensive testing.
Members of the investment community are increasing their focus on ESG practices and disclosures by public companies, including practices and disclosures related to climate change and sustainability, and heightened governance standards. At the same time, there are some stockholders and regulators who have expressed opposing views against ESG practices, including support for anti-ESG legislation and policies.
Members of the investment community may continue to be focused on sustainability practices and disclosures by public companies, including practices and disclosures related to climate change and sustainability, and heightened governance standards. At the same time, there are some stockholders and regulators who have expressed opposing views against ESG practices, including support for anti-ESG legislation and policies.
Public and investor sentiment towards climate change, fossil fuels and other ESG matters could adversely affect our operations, cost of capital, availability of capital and the price of our common stock. Opposition toward the oil and natural gas industry has been growing globally and is particularly pronounced in the United States.
Public and investor sentiment towards climate change, fossil fuels and other ESG matters could adversely affect our operations, cost of capital, availability of capital and the price of our common stock. Opposition toward the oil and natural gas industry has been growing globally.
Many factors over which we have no control affect the supply of, demand for, and our customers’ willingness to explore, develop and produce oil and natural gas, and therefore, influence the volumes we can sell and the prices we can charge for our products and services, including: ● the global supply of and demand for oil and natural gas; ● the level of prices, and expectations about future prices, of oil and natural gas, including speculative trading in crude oil and natural gas derivative contracts; ● the level of global oil and natural gas E&P capital spending; ● the cost of exploring for, developing, producing and delivering oil and natural gas, which may increase as a result of inflation in wages, materials, components, parts, equipment and other costs borne by suppliers to E&P companies; ● the expected decline rates of current production; ● the price and quantity of foreign imports; ● political and economic conditions in oil and natural gas producing countries and regions, including the United States, Canada, the Middle East, Africa, Europe, South America and Russia; ● actions by OPEC and certain other countries, including Russia (informally known as “OPEC+”), with respect to oil production levels and announcements of potential changes in such levels; ● the level of consumer product demand; ● the discovery rates of new oil and natural gas reserves; ● contractions in the credit market; ● the strength or weakness of the United States dollar (“USD”); ● available pipeline and other transportation capacity; ● the levels of oil and natural gas storage; ● weather conditions, natural disasters, including earthquakes, wildfires, floods, drought, hurricanes and tornadoes, and health concerns and epidemics; ● political instability in oil and natural gas producing countries; 17 Table of Contents ● changes in international trade policies, tariffs, or sanctions; ● domestic and foreign tax policy; ● domestic and foreign governmental approvals and regulatory requirements and conditions; ● the continued threat of terrorism, cyber warfare, and the impact of geopolitical tensions and other action, including military action in the Middle East or Ukraine; ● technological advances affecting energy demand, generation, consumption, and operations, including the adoption of AI and machine learning techniques; ● the proximity and capacity of oil and natural gas pipelines and other transportation facilities; ● alternative energy requirements or technological advances and the demand and availability of alternative energy sources; ● energy conservation measures and evolving preferences and attitudes towards climate change and sustainability, including increased focus by the investment community on sustainability practices in the oil and natural gas industry; ● climate change legislation or regulations restricting emissions of GHGs and related divestment and other efforts; ● the ability of oil and natural gas producers to raise equity capital and debt financing; ● interest rates and the cost of capital for E&P companies; ● merger and divestiture activity among oil and natural gas producers; ● cyclical/seasonal business and dependence upon spending of our customers; ● competition among oilfield service and equipment providers; and ● overall domestic and global economic conditions.
Many factors over which we have no control affect the supply of, demand for, and our customers’ willingness to explore, develop and produce oil and natural gas, and therefore, influence the volumes we can sell and the prices we can charge for our products and services, including: ● the global supply of and demand for oil and natural gas; ● the level of prices, and expectations about future prices, of oil and natural gas, including speculative trading in crude oil and natural gas derivative contracts; ● the level of global oil and natural gas E&P capital spending; ● the cost of exploring for, developing, producing and delivering oil and natural gas, which may increase as a result of inflation in the cost of wages, materials, components, parts, equipment and other expenses borne by suppliers to E&P companies; ● the expected decline rates of current production; ● the price and quantity of foreign imports; ● political and economic conditions in oil and natural gas producing countries and regions, including the United States, Canada, the Middle East, Africa, Europe, South America and Russia; ● actions by OPEC and certain other countries, including Russia (informally known as “OPEC+”), with respect to oil production levels and announcements of potential changes in such levels; ● the level of consumer product demand; ● the discovery rates of new oil and natural gas reserves; ● contractions in the credit market; ● the strength or weakness of the United States dollar (“USD”); ● the levels of oil and natural gas storage; ● weather conditions, natural disasters, including earthquakes, wildfires, floods, drought, hurricanes and tornadoes, and health concerns and epidemics; 17 Table of Contents ● changes in international trade policies, tariffs, or sanctions; ● domestic and foreign tax policy; ● domestic and foreign governmental approvals and regulatory requirements and conditions; ● the continued threat of terrorism, cyber warfare, and the impact of geopolitical tensions and other action, including the ongoing war between Russia and Ukraine, the recent U.S. involvement in Venezuela, and military action in the Middle East, including the escalation of hostilities involving the United States and Israel and Iran and associated disruptions and threats to commercial shipping in the Strait of Hormuz; ● technological advances affecting energy demand, generation, consumption, and operations, including the adoption of AI and machine learning techniques; ● the proximity and capacity of oil and natural gas pipelines and other transportation capacity; ● alternative energy requirements, technological advances and demand for alternative energy sources; ● energy conservation measures and evolving preferences and attitudes towards climate change and sustainability, including increased focus by the investment community on sustainability practices in the oil and natural gas industry; ● climate change legislation or regulations restricting emissions of GHGs and related divestment and other efforts; ● the ability of oil and natural gas producers to raise equity capital and debt financing and investor pressure for capital discipline and returns over growth; ● interest rates and the cost of capital for E&P companies; ● merger and divestiture activity among oil and natural gas producers, including industry consolidation that may reduce our customer base or alter procurement relationships; ● cyclical/seasonal business and dependence upon spending of our customers; ● competition among oilfield service and equipment providers; and ● overall domestic and global economic conditions.
We are also dependent on attracting and retaining highly skilled professionals and other technical personnel, including engineers, chemists and technicians, that could adversely affect our ability to compete in the oilfield services industry, particularly during periods of increased demand for oil and natural gas.
We are also dependent on attracting and retaining highly skilled professionals and other technical personnel, including engineers, chemists and technicians, which is critical for our ability to compete in the oilfield services industry, particularly during periods of increased demand for oil and natural gas.
The cyclicality of the oil and natural gas industry may cause our results of operations to fluctuate. We derive our revenues from companies engaged in oil and natural gas exploration and production, a historically cyclical industry with levels of activity that are significantly affected by the volatility of oil and natural gas prices.
We derive our revenues from companies engaged in oil and natural gas exploration and production, a historically cyclical industry with levels of activity that are significantly affected by the volatility of oil and natural gas prices.
Remote work relies heavily on the use of remote networking and online conferencing services that enable employees to work outside of our corporate infrastructure and, in some cases, use their own personal devices, which exposes us to additional cybersecurity risks, including unauthorized access to sensitive information as a result of increased remote access and other cybersecurity related incidents. 33 Table of Contents We are consistently subject to attempts to compromise our information technology systems.
Remote work relies heavily on the use of remote networking and online conferencing services that enable employees to work outside of our corporate infrastructure and, in some cases, use their own personal devices, which exposes us to additional cybersecurity risks, including unauthorized access to sensitive information as a result of increased remote access and other cybersecurity related incidents.
We are controlled by funds (the “Advent Funds”) managed by Advent, which beneficially own in the aggregate 59% of the combined voting power of our common stock.
We are controlled by funds (the “Advent Funds”) managed by Advent, which beneficially own a majority of the combined voting power of our common stock.
Our insurance policies may not be adequate to cover all liabilities. Our operations are subject to significant hazards often found in the oil and natural gas industry. Claims for loss of oil and natural gas production and damage to formations occur in the ordinary course of business in the well services industry.
Our insurance policies may not be adequate to cover all liabilities from hazards inherent to oil and natural gas operations. Claims for loss of oil and natural gas production, damage to formations and personal injury occur in the ordinary course of business in the well services industry.
Nonpayment and nonperformance by our customers, suppliers or vendors could adversely impact our operations, cash flows and financial condition. Weak economic conditions, volatility in the banking sector and/or widespread financial distress could reduce the liquidity of our customers, suppliers or vendors making it more difficult for them to meet their obligations to us.
Weak economic conditions, volatility in the banking sector and/or widespread financial distress could reduce the liquidity of our customers, suppliers or vendors making it more difficult for them to meet their obligations to us.
Repercussions of severe weather conditions may include: ● curtailment of drilling and completion activity; ● weather-related damage to equipment resulting in suspension of operations or the shut-in of existing production; ● weather-related damage to our facilities; ● inability to deliver equipment and materials to jobsites in accordance with contract schedules; and ● loss of productivity, or exposure of our employees to harm.
Repercussions of severe weather conditions may include: ● curtailment of drilling and completion activity; ● weather-related damage to equipment resulting in suspension of operations or the shut-in of existing production; ● weather-related damage to our facilities; ● inability to deliver equipment and materials to jobsites in accordance with contract schedules; and ● loss of productivity, employee safety incidents, or difficulties recruiting or retaining employees in locations with increased exposure to severe weather or climate-related risks.
The oilfield services industry is characterized by intense competition and rapid technological change. Our ability to maintain and grow our market position depends on several critical competitive factors, including technological capabilities, service quality, safety performance, and pricing. We face competition from both large multinational corporations and smaller local providers across our markets.
Our ability to maintain and grow our market position depends on several critical competitive factors, including our technological capabilities, service quality, safety performance, and pricing. We face competition from both large multinational corporations and smaller local providers across our markets.
Technical issues in the operation of our ERP system could cause operating and reporting delays, increased costs and other difficulties. If we are unable to successfully operate our ERP system, it could have a material adverse effect on our business, financial condition and results of operations.
Disruptions in the operation of our ERP system could cause operating and reporting delays, increased costs and other difficulties. The inability to successfully operate our ERP system could have a material adverse effect on our business, financial condition and results of operations.
In the United States, we sell a variety of products and services. To sell the fracturing systems products and services we must convince customers of the benefits of pinpoint stimulation as compared to traditional well completion techniques, which remain the prevailing methods to complete wells in the United States.
In the United States, we sell a variety of products and services. To sell fracturing systems products and services we must convince customers of the benefits of pinpoint stimulation as compared to other well completion techniques.
Any explosion or related environmental law violation could expose us to adverse publicity and liability for damages or cause production restrictions, delays or cancellations, any of which could have a material adverse effect on our financial condition, results of operations and cash flows.
Any explosion or related regulatory violation could expose us to adverse publicity, liability for damages, or production restrictions, any of which could have a material adverse effect on our business, financial condition and results of operations.
For example, we may: ● share approval rights over certain major decisions and may not be able to fully control decisions, including cash distributions to us from the joint venture; ● devote significant management time to the requirements of, and matters relating to, the joint ventures; ● engage in disputes that may result in delays, litigation or operational impasses; ● incur liabilities as a result of an action taken by our joint venture partner, including leaving us liable for the other joint venture partners’ shares of joint venture liabilities; ● not receive credit for additional borrowing capacity under the borrowing base of our ABL Facility, as in the case with the Repeat Precision joint venture; ● breach a covenant or restriction in the promissory note entered into by Repeat Precision (the “Repeat Precision Promissory Note”); ● have different systems or controls at the joint venture, which may subject us to additional risks and vulnerabilities; and ● not carry adequate insurance policies that fully cover loss or damage incurred by both us and our joint venture partners in certain circumstances.
For example, we may: ● share approval rights over certain major decisions and may not be able to fully control decisions, including cash distributions to us from the joint venture; ● devote significant management time to the requirements of, and matters relating to, the joint ventures; ● engage in disputes or disagreements over operational decisions, strategic direction, or capital allocation that may result in delays, litigation or operational impasses, or prevent the joint venture from pursuing growth opportunities or responding effectively to market conditions; ● incur liabilities as a result of an action taken by our joint venture partner, including leaving us liable for the other joint venture partners’ shares of joint venture liabilities; ● be unable to include the collateral of the joint venture in our borrowing capacity when calculating our borrowing base under the ABL Facility, as is currently the case with the Repeat Precision joint venture; ● breach a covenant or restriction in the promissory note entered into by Repeat Precision (the “Repeat Precision Promissory Note”); ● have different systems or controls at the joint venture, which may subject us to additional risks and vulnerabilities; ● face risks arising from the joint venture's operations in Mexico, such as political or economic instability, regulatory changes, currency fluctuations, or supply chain disruptions; and ● not carry adequate insurance policies that fully cover loss or damage incurred by both us and our joint venture partners in certain circumstances.
Entities we acquire may not achieve the revenue and earnings we anticipate or their liabilities may exceed our expectations. We could face integration issues pertaining to the internal controls and operational functions of the acquired companies and we also could fail to realize cost efficiencies or synergies that we anticipated when selecting our acquisition candidates.
We could face integration issues pertaining to the internal controls and operational functions of the acquired companies and we also could fail to realize cost efficiencies or synergies that we anticipated when selecting our acquisition candidates.
It is possible that our business, financial and other systems could be compromised, which could go unnoticed for a prolonged period of time.
We are consistently subject to attempts to compromise our information technology systems. It is possible that our business, financial and other systems could be compromised, which could go unnoticed for a prolonged period of time.
Furthermore, because we primarily sell our products and services at market prices, we are directly exposed to rapid price reduction and market volatility, which can materially impact our revenues and profitability. 18 Table of Contents Competition within our industry may adversely affect our ability to market our services.
Because we primarily sell our products and services at market prices, we are directly exposed to rapid price reductions and market volatility, which can materially impact our revenues and profitability. 18 Table of Contents Competition within our industry may adversely affect our competitive position and profitability. The oilfield services industry is characterized by intense competition and rapid technological change.
In addition, because our common stock is thinly traded, its market price may fluctuate significantly more than the stock market in general or the stock prices of similar companies, which are exchanged, listed or quoted on Nasdaq or another stock exchange. Approximately 32% of the shares of our common stock are held by non-affiliates as of December 31, 2024.
In addition, because our common stock is thinly traded, the market price may fluctuate significantly more than the stock market in general or the stock prices of similar companies, which are exchanged, listed or quoted on Nasdaq or another stock exchange. A significant portion of the shares of our common stock is held by affiliates, resulting in limited public float.
Moreover, failure to comply with applicable requirements or the occurrence of an explosive incident may also result in the loss of our licenses to store and handle explosives, which would have a material adverse effect on our business, financial condition and results of operations. 23 Table of Contents We are exposed to counterparty credit risk.
Moreover, failure to comply with applicable requirements or the occurrence of an explosive incident may result in the loss of our licenses to store and handle explosives, which would have a material adverse effect on our business.
If we cannot maintain technological competitiveness, improve operational efficiency, or successfully differentiate our service quality from competitors, we risk losing market share. This is particularly challenging during industry downturns when pricing pressure intensifies and equipment capacity exceeds demand.
Our future success also depends on our ability to respond quickly to evolving customer requirements, new technologies, and changing market conditions. If we cannot maintain technological competitiveness, improve operational efficiency, or successfully differentiate our service quality from competitors, we risk losing market share. This is particularly challenging during industry downturns when pricing pressure intensifies and equipment capacity exceeds demand.
The borrowing base is determined based on 85% of eligible accounts receivables, 85% of the net orderly liquidation value of eligible inventory, and 100% of cash in a specified pledged account, subject to change in the administrative agent’s permitted discretion, and does not include assets of Repeat Precision.
T he borrowing base is determined based on a percentage of eligible accounts receivable, inventory and cash in a pledged account, and is subject to change at the administrative agent’s permitted discretion, and does not include assets of Repeat Precision.
For example, during the second quarter of 2023, access to well sites in Canada were particularly impacted by wildfires, which negatively impacted certain of our customers’ cash flows, and their drilling and completion activity in the second half of 2023.
For example, during the second quarter of 2023, access was limited to certain well sites in Canada due to wildfires, which negatively impacted some customers’ cash flows and drilling and completion activity for the remainder of the year.
Also, should a low commodity price environment curtail our customers’ level of operating expenditures, we could encounter difficulties such as an inability to access needed capital on attractive terms or at all, the incurrence of impairment charges, a reduction in our borrowing capacity under our ABL Facility, a need to reduce our capital spending and other similar impacts, any of which could have a material adverse effect on our business, financial condition and results of operations.
If a low commodity price environment curtails our customers’ spending, we could encounter difficulties such as an inability to access needed capital on attractive terms or at all, the incurrence of impairment charges, a reduction in our borrowing capacity under our ABL Facility, and a need to reduce our capital spending or curtail operations.
Commitments and Contingencies, Canada Patent Matters ,” a judge of the Federal Court of Canada (“Canada Court”) rendered a decision against us holding that our asserted patents were invalid and that we infringed upon a patent of a third party. The Canada Court granted an injunction prohibiting us from any further infringement of the asserted patent.
In October 2023, the trial judge rendered a decision against us holding that our asserted patents were invalid and that we infringed upon a patent of Kobold. The Canada Court granted an injunction prohibiting us from any further infringement of the asserted patent.
Additionally, tax authorities have increasingly focused attention on intercompany transfer pricing with respect to sales of products and services and the use of intangibles. Tax authorities could disagree with our cross-jurisdictional transfer pricing or other matters and assess additional taxes. If we do not prevail in any such disagreements, our profitability and cash flows may be adversely affected.
Tax authorities could disagree with our cross-jurisdictional transfer pricing or other matters and assess additional taxes. If we do not prevail in any such disagreements, our profitability and cash flows may be adversely affected.
Since we sell a significant proportion of our products to customers outside the United States, trade tensions could reduce demand for our products, hurt our global competitive position, or result in regulatory challenges that increase our compliance costs.
Since we sell a significant proportion of our products to customers outside the United States, particularly in Canada, trade tensions could reduce demand for our products, weaken our global competitive position, or result in regulatory challenges that increase our compliance costs. The implementation of U.S. tariffs could also reduce our customers' activity levels or adversely impact foreign exchange rates.
As of December 31, 2024 , our total outstanding indebtedness was $8.1 million, of which no amounts were outstanding under our ABL Facility or the Repeat Precision Promissory Note.
As of December 31, 2025 , our total outstanding indebtedness was $7.6 million, of which no amounts were outstanding under our ABL Facility or the Repeat Precision Promissory Note , except for insignificant letter of credit commitments .
We may not be able to identify any potential acquisition or strategic partnership candidates, consummate any acquisitions or enter into any strategic partnerships, and any future acquisitions or strategic partnerships may not be successfully integrated or may not be advantageous to us. In addition, we may not have or be able to obtain sufficient capital resources to complete any acquisitions.
We may not be able to identify suitable acquisition or strategic partnership candidates, consummate any acquisitions or enter into any strategic partnerships on favorable terms, and any future acquisitions or strategic partnerships may not be successfully integrated or may not be advantageous to us.
A violation of any of these laws, even if prohibited by our policies, could have a material adverse effect on our business, financial condition or results of operations. Actual or alleged violations could damage our reputation, be expensive to defend, and impair our ability to do business.
A violation of any of these laws, even if prohibited by our policies, could have a material adverse effect on our business, financial condition or results of operations.
Hydraulic fracturing is an important common practice that is used to stimulate production of hydrocarbons, particularly natural gas, from tight formations, including shales.
Our business is dependent on the ability of our customers to conduct hydraulic fracturing and horizontal drilling activities. Hydraulic fracturing is an important common practice that is used to stimulate production of hydrocarbons, particularly natural gas, from tight formations, including shales.
In certain international jurisdictions, we conduct business through local agents. While these arrangements help us navigate local markets, our success depends on these partners' relationships, expertise and compliance with local laws and regulations.
In certain international jurisdictions, we conduct business through local agents. While these arrangements help us navigate local markets, our success depends on these partners' relationships, expertise and compliance with local laws and regulations. These agents may also represent our competitors or have competing business interests that could limit their commitment to promoting our products and services.
As a result of our hybrid work schedule, remote work and remote access to our systems has increased significantly as a large number of our office employees work remotely at least two days a week.
As a result of our hybrid work schedule, many of our employees work remotely at least two days per week and therefore access our systems remotely.
As a result, we may hold excess or obsolete inventory, which would reduce gross margin and adversely affect financial results. Conversely, if we underestimate customer demand or if insufficient manufacturing capacity is available, we would miss revenue opportunities and potentially lose market share and damage our customer relationships.
Conversely, if we underestimate customer demand or if insufficient manufacturing capacity is available, we would miss revenue opportunities and potentially lose market share and damage our customer relationships.
Such measures might not be sufficient to enable us to service our debt and any such financing or refinancing might not be available on economically favorable terms or at all.
Such measures might not be sufficient to enable us to service our debt and any such financing or refinancing might not be available on economically favorable terms or at all. In addition, the Repeat Precision Promissory Note has total aggregate borrowing capacity of $2.5 million.
When Repeat Precision increases the outstanding borrowings under the Repeat Precision Promissory Note, it may not be able to meet the ongoing interest obligations or repay the principal balance when due and the note may not be renewed on the current schedule, which could prevent Repeat Precision from pursuing its business strategies, paying us cash distributions or obtaining additional financing.
If Repeat Precision borrows under the Repeat Precision Promissory Note, there is a risk that ongoing interest obligations may not be met or repayment of the principal balance when due may not be made, or the note may not be renewed on the current schedule, which could prevent Repeat Precision from pursuing business strategies, paying cash distributions to the joint venture partners or obtaining additional financing.
Liabilities for which we are not insured, or which exceed the policy limits of our applicable insurance, could have a material adverse effect on our business, financial condition and results of operations. 22 Table of Contents Policy changes affecting international trade, including the potential imposition of new or increased tariffs, could adversely impact the demand for our products and our competitive position.
Liabilities for which we are not insured, or which exceed the policy limits of our applicable insurance, could have a material adverse effect on our business, financial condition and results of operations. 22 Table of Contents We could be subject to additional income tax liabilities.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeIn addition to our property in Calgary, Alberta, we also lease 16 properties with terms greater than 12 months including our corporate headquarters, as well as sales offices, facilities for manufacturing, engineering and district operations, a laboratory, warehouse and storage yards. All of these properties are leased from third parties.
Biggest changeIn addition to our property in Calgary, Alberta, we also lease 15 properties with terms greater than 12 months including our corporate headquarters, as well as sales offices, facilities for manufacturing, engineering and district operations, a laboratory, warehouse and storage yards. All of these properties are leased from third parties.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest change“Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” for information regarding shares of common stock authorized for issuance under our stock incentive plans. Holders On March 6, 2025, we had 2,540,849 shares of common stock outstanding, which were held by approximately 15 record holders.
Biggest change“Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” for information regarding shares of common stock authorized for issuance under our stock incentive plans. Holders On March 3, 2026, we had 2,545,535 shares of common stock outstanding, which were held by approximately 12 record holders.
Performance Graph As we are a “smaller reporting company” for the year ended December 31, 2024, we are not required to provide the performance graph under Item 201(e) of Regulation S-K. Unregistered Sales of Equity Securities and Use of Proceeds None. Issuer Purchases of Equity Securities None.
Performance Graph As we are a “smaller reporting company” for the year ended December 31, 2025, we are not required to provide the performance graph under Item 201(e) of Regulation S-K. Unregistered Sales of Equity Securities and Use of Proceeds None. Issuer Purchases of Equity Securities None.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeYear Ended December 31, Variance 2024 2023 $ % (1) Revenues Product sales $ 113,046 $ 100,447 $ 12,599 12.5 % Services 49,511 42,024 7,487 17.8 % Total revenues 162,557 142,471 20,086 14.1 % Cost of sales Cost of product sales, exclusive of depreciation and amortization expense shown below 70,446 64,242 6,204 9.7 % Cost of services, exclusive of depreciation and amortization expense shown below 24,650 22,626 2,024 8.9 % Total cost of sales, exclusive of depreciation and amortization expense shown below 95,096 86,868 8,228 9.5 % Selling, general and administrative expenses 57,820 56,518 1,302 2.3 % Depreciation 4,600 3,947 653 16.5 % Amortization 716 669 47 7.0 % Income (loss) from operations 4,325 (5,531 ) 9,856 178.2 % Other income (expense) Interest expense, net (414 ) (586 ) 172 29.4 % Provision for litigation, net of recoveries — (1,802 ) 1,802 100.0 % Other income, net 7,306 4,114 3,192 77.6 % Foreign currency exchange (loss) gain (2,963 ) 462 (3,425 ) NM Total other income 3,929 2,188 1,741 79.6 % Income (loss) before income tax 8,254 (3,343 ) 11,597 346.9 % Income tax expense (benefit) 116 (232 ) 348 150.0 % Net income (loss) 8,138 (3,111 ) 11,249 361.6 % Net income attributable to non-controlling interest 1,545 42 1,503 NM Net income (loss) attributable to NCS Multistage Holdings, Inc. $ 6,593 $ (3,153 ) $ 9,746 309.1 % (1) NM — Percentage not meaningful Year Ended December 31, Variance 2024 2023 $ % Gross Margin and Gross Margin Percentage: Cost of product sales, exclusive of depreciation and amortization expense $ 70,446 $ 64,242 $ 6,204 9.7 % Depreciation and amortization attributable to cost of product sales 1,911 1,613 298 18.5 % Cost of product sales 72,357 65,855 6,502 9.9 % Product sales gross profit $ 40,689 $ 34,592 $ 6,097 17.6 % Product sales gross margin 36.0 % 34.4 % Cost of services, exclusive of depreciation and amortization expense $ 24,650 $ 22,626 $ 2,024 8.9 % Depreciation and amortization attributable to cost of services 766 592 174 29.4 % Cost of services 25,416 23,218 2,198 9.5 % Services gross profit $ 24,095 $ 18,806 $ 5,289 28.1 % Services gross margin 48.7 % 44.8 % Total cost of sales $ 97,773 $ 89,073 $ 8,700 9.8 % Total gross profit $ 64,784 $ 53,398 $ 11,386 21.3 % Total gross margin 39.9 % 37.5 % 52 Table of Contents Year Ended December 31, Variance 2024 2023 $ % Revenues by Geographic Area: United States Product sales $ 34,082 $ 26,613 $ 7,469 28.1 % Services 9,570 11,206 (1,636 ) (14.6 )% Total United States 43,652 37,819 5,833 15.4 % Canada Product sales 74,654 71,946 2,708 3.8 % Services 27,781 26,161 1,620 6.2 % Total Canada 102,435 98,107 4,328 4.4 % Other Countries Product sales 4,310 1,888 2,422 128.3 % Services 12,160 4,657 7,503 161.1 % Total Other Countries 16,470 6,545 9,925 151.6 % Total Product sales 113,046 100,447 12,599 12.5 % Services 49,511 42,024 7,487 17.8 % Total revenues $ 162,557 $ 142,471 $ 20,086 14.1 % Year Ended December 31, 2024 compared to Year Ended December 31, 2023 Revenues Revenues were $162.6 million for the year ended December 31, 2024 compared to $142.5 million for the year ended December 31, 2023.
Biggest changeYear Ended December 31, Variance 2025 2024 $ % (1) Revenues Product sales $ 127,866 $ 113,046 $ 14,820 13.1 % Services 55,761 49,511 6,250 12.6 % Total revenues 183,627 162,557 21,070 13.0 % Cost of sales Cost of product sales, exclusive of depreciation and amortization expense shown below 78,459 70,446 8,013 11.4 % Cost of services, exclusive of depreciation and amortization expense shown below 29,742 24,650 5,092 20.7 % Total cost of sales, exclusive of depreciation and amortization expense shown below 108,201 95,096 13,105 13.8 % Selling, general and administrative expenses 58,845 57,820 1,025 1.8 % Depreciation 4,991 4,600 391 8.5 % Amortization 894 716 178 24.9 % Change in fair value of contingent consideration 156 — 156 100.0 % Income from operations 10,540 4,325 6,215 143.7 % Other income (expense) Interest expense, net (251 ) (414 ) 163 39.4 % Provision for litigation, net of recoveries 881 — 881 100.0 % Other income, net 4,759 7,306 (2,547 ) (34.9 )% Foreign currency exchange gain (loss) 891 (2,963 ) 3,854 130.1 % Total other income 6,280 3,929 2,351 59.8 % Income before income tax 16,820 8,254 8,566 103.8 % Income tax (benefit) expense (9,217 ) 116 (9,333 ) NM Net income 26,037 8,138 17,899 219.9 % Net income attributable to non-controlling interest 2,289 1,545 744 48.2 % Net income attributable to NCS Multistage Holdings, Inc. $ 23,748 $ 6,593 $ 17,155 260.2 % (1) NM — Percentage not meaningful Year Ended December 31, Variance 2025 2024 $ % Gross Margin and Gross Margin Percentage: Cost of product sales, exclusive of depreciation and amortization expense $ 78,459 $ 70,446 $ 8,013 11.4 % Depreciation and amortization attributable to cost of product sales 2,099 1,911 188 9.8 % Cost of product sales 80,558 72,357 8,201 11.3 % Product sales gross profit $ 47,308 $ 40,689 $ 6,619 16.3 % Product sales gross margin 37.0 % 36.0 % Cost of services, exclusive of depreciation and amortization expense $ 29,742 $ 24,650 $ 5,092 20.7 % Depreciation and amortization attributable to cost of services 914 766 148 19.3 % Cost of services 30,656 25,416 5,240 20.6 % Services gross profit $ 25,105 $ 24,095 $ 1,010 4.2 % Services gross margin 45.0 % 48.7 % Total cost of sales $ 111,214 $ 97,773 $ 13,441 13.7 % Total gross profit $ 72,413 $ 64,784 $ 7,629 11.8 % Total gross margin 39.4 % 39.9 % 52 Table of Contents Year Ended December 31, Variance 2025 2024 $ % Revenues by Geographic Area: United States Product sales $ 40,302 $ 34,082 $ 6,220 18.3 % Services 17,971 9,570 8,401 87.8 % Total United States 58,273 43,652 14,621 33.5 % Canada Product sales 77,819 74,654 3,165 4.2 % Services 29,412 27,781 1,631 5.9 % Total Canada 107,231 102,435 4,796 4.7 % Other Countries Product sales 9,745 4,310 5,435 126.1 % Services 8,378 12,160 (3,782 ) (31.1 )% Total Other Countries 18,123 16,470 1,653 10.0 % Total Product sales 127,866 113,046 14,820 13.1 % Services 55,761 49,511 6,250 12.6 % Total revenues $ 183,627 $ 162,557 $ 21,070 13.0 % Year Ended December 31, 2025 compared to Year Ended December 31, 2024 Revenues Revenues were $183.6 million for the year ended December 31, 2025 compared to $162.6 million for the year ended December 31, 2024.
Although we believe our estimates to be reasonable, we cannot assure that our reserves will be adequate to cover potential losses, or that we will have recoveries, if there are significant changes in market preferences or technological advancements by our competitors that render a portion of our current inventory as obsolete.
Although we believe our estimates to be reasonable, we cannot assure that our reserves will be adequate to cover potential losses, or that we will have recoveries, if there are significant changes in market preferences or technological advancements by our competitors that render a portion of our current inventory obsolete.
We provide our products and services primarily to 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.
We provide our products and services primarily to E&P companies for use in onshore and offshore wells, predominantly those that have been drilled with horizontal laterals in both unconventional and conventional oil and natural gas formations.
For the year ended December 31, 2024, we recognized an impairment charge of less than $0.1 million related to an indefinite-lived intangible asset that was no longer deemed to provide a future benefit. See “Note 8. Goodwill and Identifiable Intangibles” to our consolidated financial statements for additional details.
For the year ended December 31, 2024, we recognized an impairment charge of less than $0.1 million related to an indefinite-lived intangible asset that was no longer deemed to provide a future benefit. See “Note 9. Goodwill and Identifiable Intangibles” to our consolidated financial statements for additional details.
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.
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 alternative completion techniques. Our fracturing systems products and services are utilized in conjunction with third-party providers of pressure pumping, coiled tubing and other services.
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, severance expenses and expected credit losses.
Our 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 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 December 31, 2024.
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 December 31, 2025.
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 number of hydrocarbons produced from their assets.
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.
Net borrowings and repayments under the Repeat Promissory Note had no relative impact on cash flows from financing activities for the years ended December 31, 2024 and 2023. Material Cash Requirements Our material cash requirements include the following contractual and other obligations.
Net borrowings and repayments under the Repeat Promissory Note had no relative impact on cash flows from financing activities for the years ended December 31, 2025 and 2024. Material Cash Requirements Our material cash requirements include the following contractual and other obligations.
Purchase Obligations Our purchase obligations totaled $6.7 million as of December 31, 2024, and primarily represented commitments to purchase goods or services to be utilized in the normal course of business, of which $2.0 million is accrued on the accompanying consolidated balance sheet, and $4.7 million did not meet the criteria to accrue, as the products or services were not received or incurred as of this date, but are expected to meet this criteria within the next 12 months.
Purchase Obligations Our purchase obligations totaled $7.6 million as of December 31, 2025, and primarily represented commitments to purchase goods or services to be utilized in the normal course of business, of which $0.6 million is accrued on the accompanying consolidated balance sheet, and $7.0 million did not meet the criteria to accrue, as the products or services were not received or incurred as of this date, but are expected to meet this criteria within the next 12 months.
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.
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 completion and field development strategies.
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 26% and 28%, for the years ended December 31, 2024 and 2023, respectively. 51 Table of Contents Results of Operations The following tables summarize our results of operations, gross margins and revenues by geographic area for the years ended December 31, 2024 and 2023.
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 25% and 26% for the years ended December 31, 2025 and 2024, respectively. 51 Table of Contents Results of Operations The following tables summarize our results of operations, gross margins and revenues by geographic area for the years ended December 31, 2025 and 2024.
Manufacturing cost of sales includes payments made to our suppliers for raw materials 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.
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.
As of December 31, 2024, Repeat Precision had no outstanding indebtedness under the promissory note. See “Note 10. Debt” to our consolidated financial statements for additional details regarding our credit agreement and the promissory note. Leases We have operating and finance leases for facilities, vehicles, equipment, and software.
As of December 31, 2025, Repeat Precision had no outstanding indebtedness under the promissory note. See “Note 11. Debt” to our consolidated financial statements for additional details regarding our credit agreement and the promissory note. Leases We have operating and finance leases for facilities, vehicles, equipment, and software.
The percentages of our revenues derived from sales in Canada and denominated in Canadian dollars were approximately 63% and 69% for the years ended December 31, 2024 and 2023, respectively. Our Canadian contracts are typically invoiced in Canadian dollars; therefore, the effects of foreign currency fluctuations impact our revenues and are regularly monitored.
The percentages of our revenues derived from sales in Canada and denominated in Canadian dollars were approximately 58% and 63% for the years ended December 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.
We currently expect U.S. rig counts and completion activity for 2025 to be slightly lower than the comparable data for 2024, but we expect the Canadian activity level to remain stable or slightly higher than the activity level for the prior year. A substantial portion of our business is subject to seasonality, which results in quarterly variability.
We currently expect U.S. rig counts and completion activity for 2026 to be slightly lower than the comparable data for 2025, but we expect the Canadian activity level to remain stable compared to the prior year. A substantial portion of our business is subject to seasonality, which results in quarterly variability.
Future settlements which result in loss or awards could be material to our financial statements and cannot be predicted with certainty. See “Note 11. Commitments and Contingencies” of our consolidated financial statements for further information regarding our legal proceedings. 58 Table of Contents Recently Issued Accounting Pronouncements See “Note 2.
Future settlements which result in loss or awards could be material to our financial statements and cannot be predicted with certainty. See “Note 12. Commitments and Contingencies” of our consolidated financial statements for further information regarding our legal proceedings. Recently Issued Accounting Pronouncements See “Note 2.
At December 31, 2024, our available borrowing base under the ABL Facility was $20.1 million and we had no outstanding indebtedness under the ABL Facility. 56 Table of Contents Repeat Precision also has an outstanding promissory note with an aggregate borrowing capacity of up to $2.5 million as of December 31, 2024, subject to a borrowing base.
At December 31, 2025, our available borrowing base under the ABL Facility was $24.4 million and we had no outstanding indebtedness under the ABL Facility. 56 Table of Contents Repeat Precision also has an outstanding promissory note with an aggregate borrowing capacity of up to $2.5 million as of December 31, 2025, subject to a borrowing base.
We have recorded valuation allowances to reduce our deferred tax assets as of December 31, 2024 and 2023, based upon our overall assessment of the likelihood of the realization of those deferred tax assets when considering the positive and negative evidence available, including forecasts of future taxable income in the jurisdictions in which these deferred tax assets are recorded.
Historically, we have recorded valuation allowances to reduce our deferred tax assets based upon our overall assessment of the likelihood of the realization of those deferred tax assets when considering the positive and negative evidence available, including forecasts of future taxable income in the jurisdictions in which these deferred tax assets are recorded.
Product sales represented 70% and 71% of our revenues for the years ended December 31, 2024 and 2023, 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 filled on negotiated terms.
Product sales represented 70% of our revenues for each of the years ended December 31, 2025 and 2024. 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.
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.
Our revenues are also impacted by the well complexity, since wells with more stages typically result in longer jobs, which may increase revenue due to the use of more sliding sleeves or more frac plugs and increase the volume of services we provide.
Services represented 30% and 29% of our revenues for the years ended December 31, 2024 and 2023, respectively. Services include tool charges and associated personnel services related to fracturing systems and tracer diagnostics services.
Services represented 30% of our revenues for each of the years ended December 31, 2025 and 2024. Services include tool charges and associated personnel services related to fracturing systems and tracer diagnostics services.
The liability method is used in accounting for deferred income taxes. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when these differences are expected to reverse.
Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when these differences are expected to reverse.
Financing Activities Net cash used in financing activities for the years ended December 31, 2024 and 2023 was $4.3 million and $2.4 million, respectively.
Financing Activities Net cash used in financing activities for the years ended December 31, 2025 and 2024 was $5.3 million and $4.3 million, respectively.
As of December 31, 2024, we had cash and cash equivalents of $25.9 million, and total outstanding indebtedness of $8.1 million related to finance lease obligations, of which $2.1 million is due within 12 months. Our ABL Facility consists of an asset-based revolving credit facility in an aggregate principal amount of $35.0 million.
As of December 31, 2025, we had cash and cash equivalents of $36.7 million, and total outstanding indebtedness of $7.6 million related to finance lease obligations, of which $2.4 million is due within 12 months. Our ABL Facility consists of an asset-based revolving credit facility in an aggregate principal amount of $35.0 million.
As of December 31, 2024, we had lease payment obligations, including interest payments for finance leases of $17.1 million, with $4.6 million payable within 12 months. See “Note 2. Summary of Significant Accounting Policies” and “Note 15. Leases” to our consolidated financial statements for additional information on lease obligations and maturities.
As of December 31, 2025, we had lease payment obligations, including interest payments for finance leases of $14.9 million, with $4.7 million payable within 12 months. See “Note 2. Summary of Significant Accounting Policies” and “Note 16. Leases” to our consolidated financial statements for additional information on lease obligations and maturities.
We believe that the estimates and assumptions used in our impairment assessments are reasonable. However, if market conditions change dramatically, the impact on our forecasts and projections may be significant which could result in future impairments for our reportable units with long-term assets including goodwill. Income Taxes We are taxed as a corporation as defined under the Internal Revenue Code.
We believe that the estimates and assumptions used in our impairment assessments are reasonable. However, if market conditions change dramatically, the impact on our forecasts and projections may be significant which could result in future impairments for our reportable units with long-term assets including goodwill.
Department of Energy: Average Price Quarter Ended WTI Crude (per Bbl) Brent Crude (per Bbl) Henry Hub Natural Gas (per MMBtu) 3/31/2023 $ 75.93 $ 81.07 $ 2.64 6/30/2023 73.54 77.99 2.16 9/30/2023 82.25 86.65 2.59 12/31/2023 78.53 84.01 2.74 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 47 Table of Contents 48 Table of Contents 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 2023, as provided by Baker Hughes.
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 6/30/2025 64.57 68.07 3.19 9/30/2025 65.78 69.03 3.03 12/31/2025 59.62 63.65 3.73 48 Table of Contents 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.
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 SG&A expenses.
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.
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 provided our products and services to over 200 customers in 2024, including leading large independent oil and natural gas companies and major oil companies.
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 and Argentina. We provided our products and services to more than 230 customers in 2025, including large independent oil and natural gas companies and major oil companies.
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 since declined from recent highs.
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.
Actual results may not align with these assumptions, and our expectations regarding future net cash flows may change such that a material impairment could result. Historically, we have recorded impairments associated with property and equipment, identifiable intangible assets and goodwill.
Actual results may not align with these assumptions, and our expectations regarding future net cash flows may change such that a material impairment could result. Historically, we have recorded impairments associated with property and equipment, identifiable intangible assets and goodwill. For the year ended December 31, 2025, we did not record any impairment charges.
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.
These factors were partially offset by higher production. 47 Table of Contents 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, which could be the result of tariffs, would be expected to lead North American E&P companies to reduce drilling and completion activity, which could negatively impact our business.
We plan to incur approximately $1.5 million to $2.0 million in capital expenditures 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.
We plan to incur approximately $1.4 million to $1.8 million in capital expenditures during 2026, which includes (i) upgrades to our Repeat Precision manufacturing facilities, (ii) upgrades to our tracer diagnostics deployment, sampling and laboratory equipment, (iii) upgrades to our manufacturing and field service equipment to support North American fracturing systems and well construction businesses and (iv) additional research and development equipment for product development.
We own a 50% interest in 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 own a 50% interest in 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 tracers.
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.
Smaller Reporting Company Status We are a “smaller reporting company” as defined by Rule 12b-2 under the Exchange Act, because 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 of the last business day of our most recently completed second fiscal quarter.
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.
These international sales are made through local NCS entities or to our local operating partners, primarily in the Middle East, usually on a free on board or free carrier basis with a point of sale in the United States.
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.
To the extent we require additional liquidity to fund an acquisition or our capital requirements, we would expect to obtain this funding through the incurrence of additional indebtedness, the proceeds of equity issuances, or a combination thereof.
Our primary uses of funds during the years ended December 31, 2024 and 2023 were principal payments of $2.0 million and $1.6 million, respectively, related to our finance leases, payments of $0.3 million for 2024 and 2023 for treasury shares withheld to settle withholding tax requirements for equity-settled share-based compensation, and distributions of $2.1 million and $0.5 million, respectively, to Repeat Precision’s other joint venture partner.
Our primary uses of funds during the years ended December 31, 2025 and 2024 were principal payments related to our finance lease obligations totaling $2.2 million and $2.0 million, respectively, payments of $0.3 million for each of the years ended 2025 and 2024 for treasury shares withheld to settle withholding tax requirements for equity-settled awards, and cash distributions of $2.7 million and $2.1 million, respectively, to our joint venture partner.
Oil and natural gas drilling and completion activity is directly influenced by oil and natural gas prices. For 2025, industry forecasts and announced capital budgets from E&P companies indicate varying regional trends in drilling and completion activity. In Canada, we anticipate activity levels to remain stable or increase marginally compared to 2024.
For 2026, industry forecasts and announced capital budgets from E&P companies indicate varying regional trends in drilling and completion activity. In Canada, we anticipate activity levels to remain stable compared to 2025.
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.
Our SG&A expenses include general operating costs and compensation expense, primarily the compensation and benefits for our employees who are not directly involved in revenue generating activities, including those involved in research and development activities.
An increase of obsolescence expense by 10%, or $0.1 million, would not be deemed material to our financial statements. 57 Table of Contents Impairments We evaluate our property and equipment and identifiable intangible assets for impairment whenever changes in circumstances indicate that the carrying amount of an asset group may not be recoverable or if there are potential indicators of impairment.
Impairments We evaluate our property and equipment and identifiable intangible assets for impairment whenever changes in circumstances indicate that the carrying amount of an asset group may not be recoverable or if there are potential indicators of impairment.
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.
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, which can result in lower drilling and completion activity during the fourth quarter. How We Generate Revenues We derive our revenues from the sale of products and provision of services.
As of December 31, 2024, Repeat Precision has no outstanding indebtedness under the promissory note. We believe that our cash on hand, cash flows from operations and potential borrowings under our ABL Facility and the Repeat Precision Promissory Note will be sufficient to fund our capital expenditure and liquidity requirements for the next twelve months and after.
We expect to renew the Repeat Precision Promissory Note prior to its maturity. 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 at least the next twelve months.
Land Canada Land North America Land 3/31/2023 744 221 965 6/30/2023 699 116 815 9/30/2023 630 187 817 12/31/2023 601 180 781 3/31/2024 602 208 810 6/30/2024 583 134 717 9/30/2024 566 207 773 12/31/2024 571 194 765 49 Table of Contents 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.
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 6/30/2025 559 127 686 9/30/2025 527 176 703 12/31/2025 530 185 715 49 Table of Contents Over the past several years, North American E&P companies have been able to reduce their cost structures and have also utiliz ed technologies, including ours, to increase efficiency and improve well performance.
Cost of product sales was $72.4 million or 64.0% of product sales revenue, and cost of services was $25.4 million or 51.3% of services revenue for the year ended December 31, 2024.
For the year ended December 31, 2024, cost of product sales was $72.4 million or 64.0% of product sales revenue, and cost of services was $25.4 million or 51.3% of services revenue. 53 Table of Contents Selling, general and administrative expenses Selling, general and administrative expenses were $58.8 million for the year ended December 31, 2025 compared to $57.8 million for the year ended December 31, 2024.
For the year ended December 31, 2023, cost of product sales was $65.9 million or 65.6% of product sales revenue, and cost of services was $23.2 million or 55.2% of services revenue.
Cost of product sales was $80.6 million or 63.0% of product sales revenue, and cost of services was $30.7 million or 55% of services revenue for the year ended December 31, 2025.
Inventories Inventories of raw material, work in progress and finished goods are maintained and valued at the lower of cost or estimated net realizable value, with cost determined at standard costs which approximates the first-in, first-out or average cost basis.
A 10% change in the level of concessions incurred within a fiscal year would not be deemed significant to our results of operations. 57 Table of Contents Inventories Inventories of raw material, work in progress and finished goods are maintained and valued at the lower of cost or estimated net realizable value, with cost determined at standard costs which approximates the first-in, first-out or average cost basis.
Foreign currency exchange gain (loss) Foreign currency exchange loss was $3.0 million for the year ended December 31, 2024 compared to a gain of $0.5 million for the year ended December 31, 2023. The change was due to the movement in the foreign currency exchange rates, primarily due to the strengthening of the U.S. dollar relative to the Canadian dollar.
The change was due to the movement in the foreign currency exchange rates during the periods, primarily the impact of the Canadian dollar relative to the U.S. dollar. Income tax (benefit) expense Income tax benefit was $9.2 million for the year ended December 31, 2025 compared to income tax expense of $0.1 million for the year ended December 31, 2024.
Canadian completions activity can be impacted by wildfires that are usually experienced in the spring and summer seasons, but weather and wildfire conditions in 2024 were favorable compared to 2023. Our business activity can also be affected by customer spending patterns.
Canadian completions activity can be impacted by wildfires that are usually experienced in the spring and summer seasons, as well as shortages of water available to oil and gas operators. Our business activity can also be affected by customer spending patterns.
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.
Our products include fracturing systems and enhanced recovery systems, casing buoyancy systems, liner hanger systems, and toe initiation sleeves, as well as composite and dissolvable frac plugs, setting tools, and perforating guns sold through Repeat Precision. Our services include fracturing systems field services and tracer diagnostics.
A valuation allowance to reduce deferred tax assets is established when it is more likely than not that some portion or all the deferred tax assets will not be realized. We have incurred operating losses in certain tax jurisdictions during each of the years ended December 31, 2024 and 2023.
A valuation allowance to reduce deferred tax assets is established when it is more likely than not that some portion or all the deferred tax assets will not be realized.
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.
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.
Litigation In the ordinary course of 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. We accrue for contingencies where the occurrence of a material loss is probable and can be reasonably estimated, based on our estimate of the expected liability.
Income Taxes” of our consolidated financial statements for further information. Litigation In the ordinary course of 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.
Also, as a majority of our sliding sleeves and other components sold in Canada are assembled in the United States, retaliatory tariffs implemented by Canada on goods entering from the United States could increase our product costs in Canada.
Most of our sliding sleeves and other products sold in Canada are sourced from the United States; therefore, any retaliatory tariffs imposed by the Canadian government on goods imported from the United States could further increase our product costs in Canada.
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.
As a smaller reporting company, we may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies, including among other things, being exempt from the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, providing only two years of audited financial statements, and providing reduced disclosure obligations regarding executive compensation. 58 Table of Contents
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.
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 increase in 2025 was driven by colder winter temperatures, a late-year polar vortex event, and higher demand associated with expanded U.S.
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.
Our products and services are primarily sold to North American E&P companies. Our ability to generate revenues from our products and services depends largely 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.
The quarterly changes, particularly for the second quarter Canadian land rig count, are partially attributable to seasonality of activity in that market: Average Drilling Rig Count Quarter Ended U.S.
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.
We have incurred charges to cost of sales related to obsolescence of $1.1 million and $1.2 million for the years ended December 31, 2024 and 2023, respectively.
We have incurred charges to cost of sales related to obsolescence of $0.9 million and $1.1 million for the years ended December 31, 2025 and 2024, respectively. An increase of obsolescence expense by 10%, or $0.1 million, would not be deemed material to our financial statements.
For the years ended December 31, 2024 and 2023, we recorded a provision for credit losses of less than $0.1 million and $0.2 million, respectively. Further, to the extent deemed necessary by management, and depending on the circumstances, we may issue customer credits or concessions which reduce our revenues, but do not impact our expected credit losses.
Further, to the extent deemed necessary by management, and depending on the circumstances, we may issue customer credits or concessions which reduce our revenues, but do not impact our expected credit losses. The nature of these concessions may be to maintain a customer relationship. Historically, these concessions have not been significant to our financial condition or results of operations.
The average U.S. land rig count and completion activity has decreased from the highs reached during the fourth quarter of 2022. In the fourth quarter of 2024, the average U.S. land rig count was 571, a decline of 5% compared to the fourth quarter of 2023, but relatively stable compared to the third quarter of 2024.
In the fourth quarter of 2025, the average U.S. land rig count was 530, a decline of 7% compared to the fourth quarter of 2024, but relatively stable compared to the third quarter of 2025. The average land rig count in Canada for the fourth quarter of 2025 was 5% lower compared to the same period in 2024.
The increase is primarily associated with assets placed in service during the year ended December 31, 2024 , primarily light vehicles and trucks under finance leases through our leasing program with a fleet mana gement company. Provision for litigation, net of recoveries The provision for litigation, net of recoveries totaled $1.8 million for the year ended December 31, 2023.
The increase is primarily associated with assets placed in service during the year ended December 31, 2025 , including light vehicles under finance lease arrangements through our leasing program with a fleet mana gement company, as well as fixed assets added in connection with the ResMetrics acquisition.
Total borrowings available to us under the ABL Facility may be limited subject to a borrowing base calculated on the sum of cash in a specified pledged account, eligible accounts receivables and eligible inventory, provided it does not include the assets of Repeat Precision.
Financing Arrangements Our ABL Facility consists of a revolving credit facility in an aggregate principal amount of $35.0 million. Total borrowings available to us under the ABL Facility may be limited subject to a borrowing base calculated based on eligible accounts receivable and inventory, provided such eligible balances cannot include the assets of Repeat Precision.
Investing Activities Net cash provided by (used in) investing activities was $0.5 million and $(1.7) million for the years ended December 31, 2024 and 2023, respectively.
Investing Activities Net cash (used in) provided by investing activities was $(6.3) million and $0.5 million for the years ended December 31, 2025 and 2024, respectively, of which $5.8 million was used to acquire ResMetrics in July 2025. See “Note 3. Acquisition” to our consolidated financial statements.
Our net income was $11.2 million higher in 2024 compared to 2023. This improved performance reflects an increase in revenue for the year of 2024 compared to the same period in 2023. The increase in sales impacts the timing of trade receivable billings and collections, our inventory levels, and payments for materials and components.
Additionally, the revenue increase for the year ended 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.
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, including from tariffs.
See further discussion below on oil and natural gas pricing. 46 Table of Contents 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.
We obtain certain chemicals utilized in our tracer diagnostics services business from suppliers in China, which are subject to tariffs that increase our costs.
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 also source certain product categories from other international suppliers.
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. 55 Table of Contents Cash Flows The following table provides a summary of cash flows from operating, investing and financing activities for the periods presented (in thousands): Year Ended December 31, 2024 2023 Net cash provided by operating activities $ 12,725 $ 4,774 Net cash provided by (used in) investing activities 479 (1,683 ) Net cash used in financing activities (4,269 ) (2,441 ) Effect of exchange rate changes on cash and cash equivalents 225 (164 ) Net change in cash and cash equivalents $ 9,160 $ 486 Operating Activities Net cash provided by operating activities was $12.7 million compared to $4.8 million for the years ended December 31, 2024 and 2023, respectively.
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. 55 Table of Contents Cash Flows The following table provides a summary of cash flows from operating, investing and financing activities for the periods presented (in thousands): Year Ended December 31, 2025 2024 Net cash provided by operating activities $ 22,175 $ 12,725 Net cash (used in) provided by investing activities (6,293 ) 479 Net cash used in financing activities (5,303 ) (4,269 ) Effect of exchange rate changes on cash and cash equivalents 266 225 Net change in cash and cash equivalents $ 10,845 $ 9,160 Operating Activities Net cash provided by operating activities was $22.2 million compared to $12.7 million for the years ended December 31, 2025 and 2024, respectively.
In addition, the Repeat Precision Promissory Note with Security State Bank & Trust, Fredericksburg has total aggregate borrowing capacity of $2.5 million, lowered from an aggregate borrowing capacity of $4.3 million upon renewal in May 2024, as discussed at “Note 10. Debt, Repeat Precision Promissory Note ” to our consolidated financial statements.
In addition, the Repeat Precision Promissory Note with Security State Bank & Trust, Fredericksburg has total aggregate borrowing capacity of $2.5 million, a reduction from $4.3 million in the prior year, with a maturity date in May 2026 and has no borrowings outstanding as of December 31, 2025.
The U.S. market is expected to experience a modest decline in activity, driven by conservative oil production growth targets and ongoing consolidation within the E&P sector. While overall industry spending in international markets may be relatively flat, certain markets that NCS participates in, including the North Sea, the Middle East and Argentina, could experience increases in activity and spending.
The U.S. market is expected to experience a slight decline in activity relative to 2025, driven by conservative oil production growth targets and ongoing consolidation within the E&P sector, partially offset by expected potential increases in activity targeting natural gas.
Income tax expense (benefit) Income tax expense was $0.1 million for the year ended December 31, 2024 compared to a tax benefit of $0.2 million for the year ended December 31, 2023. Our effective tax rate (“ETR”) from continuing operations was 1.4% and 6.9% for the years ended December 31, 2024 and 2023, respectively.
Our effective tax rate (“ETR”) from continuing operations was (54.8%) and 1.4% for the years ended December 31, 2025 and 2024, respectively. The income tax (benefit) expense for these periods primarily relates to results generated by our businesses in the United States, Canada, and certain other foreign jurisdictions.
Services revenue was $49.5 million for the year ended December 31, 2024 compared to $42.0 million for the year ended December 31, 2023. Cost of sales Cost of sales was $97.8 million, or 60.1% of revenues, for the year ended December 31, 2024 as compared to $89.1 million, or 62.5% of revenues, for the year ended December 31, 2023.
Product sales for the year ended December 31, 2025 were $127.9 million compared to $113.1 million for the year ended December 31, 2024. Services revenue was $55.7 million for the year ended December 31, 2025 compared to $49.5 million for the year ended December 31, 2024.
Since 2022 and continuing into 2024, to address the uncertain outlook for the global economy and, specifically the oil markets, and to reduce the potential of an oil and gas inventory build, members of OPEC+ agreed to several collective voluntary oil production reductions beginning in November 2022.
These downward pressures were partially offset by geopolitical tensions and low, but rising, inventory levels. Over the past few years, OPEC+ implemented several collective voluntary oil production reductions 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.
The voluntary production cuts have been extended and are expected to be phased out starting in April 2025 through the end of 2026. Natural gas pricing continues to be volatile and decreased in 2024 to an average level of $2.19 per MMBtu compared to an average level of $2.53 per MMBtu during 2023.
In March 2026, OPEC+ announced it would resume the gradual unwinding of voluntary production cuts beginning in April 2026, while emphasizing flexibility to adjust production levels in response to evolving market and geopolitical conditions. Natural gas pricing continues to be volatile and increased in 2025 to an average level of $3.52 per MMBtu compared to $2.19 per MMBtu during 2024.
While inflationary cost pressures moderated since the latter half of 2023, the anticipated implementation of new tariffs in 2025 could lead to additional costs that we may not be able to recover through price increases. 46 Table of Contents Over the past few years, we have experienced modest supply chain disruptions and higher prices for certain raw materials, including steel and chemicals, as well as purchased components and outsourced services.
While inflationary cost pressures moderated somewhat in 2024 and 2025, the implementation of new tariffs, including steel and aluminum, and the continued threats of additional tariffs have led to additional costs that we may not be able to recover through price increases.
Our capital expenditures, including the purchase and development of software and technology, for the years ended December 31, 2024 and 2023 were $1.4 million and $2.2 million, respectively.
Our capital expenditures, including the purchase and development of software and technology, for the years ended December 31, 2025 and 2024 were $1.3 million and $1.4 million, respectively. 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.
Summary of Significant Accounting Policies, Income Taxes ” to the accompanying consolidated financial statements. 54 Table of Contents 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 ABL Facility and the Repeat Precision Promissory Note.
For both of the years ended December 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 book income . 54 Table of Contents 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 ABL Facility.
Other income, net Other income, net was $7.3 million for the year ended December 31, 2024 compared to $4.1 million for the year ended December 31, 2023. The increase in other income was primarily attributable to royalty income from licensees and an increase in the benefit associated with our technical services and assistance agreement with our local partner in Oman.
Other income, net Other income, net was $4.8 million for the year ended December 31, 2025 compared to $7.3 million for the year ended December 31, 2024.
Total borrowings are limited to a borrowing base calculated on the sum of cash in a specified pledged account, eligible accounts receivable and eligible inventory, provided it does not include credit for the assets of Repeat Precision. At December 31, 2024, our available borrowing base under the ABL Facility was $20.1 million, with no outstanding borrowings.
Total borrowings available under the ABL Facility may be limited subject to a borrowing base calculated based on eligible accounts receivable and inventory, provided such eligible balances cannot include the assets of Repeat Precision. Following the integration of ResMetrics into NCS and with lender approval, the borrowing base now includes eligible accounts receivable and inventory associated with ResMetrics.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeDuring the years ended December 31, 2024 and 2023, approximately 63% and 69%, respectively, of our revenues were attributable to our operations in Canada. We also derive revenue from several jurisdictions outside of North America, including countries that occasionally experience periods of significant inflation, which occurred in Argentina in 2024 and 2023.
Biggest changeDuring the years ended December 31, 2025 and 2024, approximately 58% and 63%, respectively, of our revenues were attributable to our operations in Canada. We also derive revenue from several jurisdictions outside of North America, including countries that occasionally experience periods of significant inflation, which occurred in Argentina in 2025 and 2024.
We do not currently intend to hedge our future exposure to the Argentine Peso or other foreign currencies. Interest Rate Risk We were primarily exposed to interest rate risk through our ABL Facility. At December 31, 2024, we had no outstanding indebtedness under our ABL Facility.
We do not currently intend to hedge our future exposure to the Argentine Peso or other foreign currencies. Interest Rate Risk We were primarily exposed to interest rate risk through our ABL Facility. At December 31, 2025, we had no outstanding indebtedness under our ABL Facility.
This concentration of counterparties operating in a single industry may increase our overall exposure to credit risk, in that the counterparties may be similarly affected by changes in economic, regulatory or other conditions. We manage credit risk by analyzing the counterparties’ financial condition prior to accepting new customers and prior to adjusting existing credit limits. 59 Table of Contents
This concentration of counterparties operating in a single industry may increase our overall exposure to credit risk, in that the counterparties may be similarly affected by changes in economic, regulatory or other conditions. We manage credit risk by analyzing the counterparties’ financial condition prior to accepting new customers and prior to adjusting existing credit limits.
Borrowings under the Repeat Precision Promissory Note are made in U.S. dollars with interest calculated using the prime rate plus a 1.0% margin over the index. The applicable interest rate at December 31, 2024 was 8.5%. Credit Risk Our customers are E&P companies and other oilfield services companies.
Borrowings under the Repeat Precision Promissory Note are made in U.S. dollars with interest calculated using the prime rate plus a 1.0% margin over the index. The applicable interest rate at December 31, 2025 was 7.8%. Credit Risk Our customers are E&P companies and other oilfield services companies.
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 December 31, 2024 was 6.9%. We are also subject to interest rate risk through our Repeat Precision Promissory Note. At December 31, 2024, we had no outstanding indebtedness under the Repeat Precision Promissory Note.
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 December 31, 2025 was 6.3%. We are also subject to interest rate risk through our Repeat Precision Promissory Note. At December 31, 2025, we had no outstanding indebtedness under the Repeat Precision Promissory Note.
Added
For the year ended December 31, 2025, two of our largest customers merged, and the succeeding company on a combined basis accounted for 18% of our consolidated revenue and 19% of our trade receivables. No single customer individually accounted for 10% of our consolidated revenue or trade accounts receivable balance as of December 31, 2024. 59 Table of Contents

Other NCSM 10-K year-over-year comparisons