NCSM US Equity☆

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following is a discussion and analysis of our financial condition and results of operations as of, and for, the periods presented. You should read the following discussion and analysis of our financial condition and results of operations together with the sections entitled Item 1A. “Risk Factors,”“—Cautionary Note Regarding Forward-Looking Statements,” and our consolidated financial statements and related notes thereto included elsewhere in this Form 10-K. This section and other parts of the Form 10-K contain forward-looking statements regarding the industry outlook, estimates and assumptions concerning events and financial and industry trends that may affect our future results of operations or financial condition and other non-historical statements. These forward-looking statements are subject to numerous risks and uncertainties, including but not limited to the risks and uncertainties described in “—Cautionary Note Regarding Forward-Looking Statements” and Item1A. “Risk Factors.” Our actual results may differ materially from those contained in or implied by these forward-looking statements.

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. 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. 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.

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

We own a 50% interest in Repeat Precision, 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. We sell products for well construction, including casing buoyancy systems, liner hanger systems and toe initiation sleeves as well as certain complementary products provided by third parties. We operate in one reportable segment that has been identified based on how our chief operating decision maker manages our business.

On July 31, 2025, we acquired 100% of the equity interests of ResMetrics, a provider of tracer diagnostics services, for $7.1 million, on a cash-free, debt-free basis. The purchase consideration included $5.8 million in cash, including a working capital adjustment, $0.3 million of debt assumed and contingent consideration of $1.1 million, which was remeasured as of December 31, 2025, and paid at the maximum of $1.3 million in January 2026. The acquisition expands our tracer diagnostics capabilities and strengthens our service offerings.

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.

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. 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. Although overall industry spending in international markets may be relatively flat year-over-year, certain markets in which we compete may experience an increase in activity and spending, particularly the Middle East, the North Sea and Argentina.

Oil and natural gas prices were volatile through 2025 and continuing through early 2026. This volatility has been influenced by multiple factors, including geopolitical incidents from trade tensions, the ongoing war between Russia and Ukraine, conflicts in the Middle East and the recent U.S. involvement in Venezuela, 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. Trade disruptions or any further escalation of these conflicts could intensify commodity price volatility. Also impacting commodity prices are adjustments in oil supply by OPEC+ countries, as they began phasing out voluntary cuts in 2025 but announced a pause on planned production increases for February and March 2026 to support market stability. See further discussion below on oil and natural gas pricing.

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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 to offset rising costs, particularly during periods of higher cost inflation or periods affected by the uncertainty of escalating and de-escalating tariffs, with supply-chain costs impacted by the level of tariffs then in effect. 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.

In April 2025, the U.S. administration announced targeted tariff measures affecting multiple countries, many of which were substantial, and subsequently paused implementation for 90 days. The pause was later extended through August 2025 and has since expired. While certain countries have reached trade agreements with the United States, others remain subject to elevated tariff rates. Certain tariffs remained in effect during the pause period, including baseline tariffs on imported goods and existing tariffs on steel and aluminum imposed under Section 232 of the Trade Expansion Act. The U.S. Supreme Court heard arguments in November 2025 on the legality of certain tariffs imposed under the International Emergency Economic Powers Act and, in February 2026, issued a decision invalidating most tariffs imposed under that statute. Following the decision, the U.S. Administration announced alternative tariff measures, including a temporary global tariff of 15%, subject to statutory limitations.

For Canada and Mexico, goods covered by the United States-Mexico-Canada Agreement (“USMCA”) continue to be exempt from tariffs; however, ongoing trade tensions and the upcoming six-year review in July 2026 may result in amendments or additional measures that could potentially affect even USMCA-compliant goods. Our Repeat Precision joint venture provides manufacturing services for components used in our fracturing systems products in Mexico. We believe our supply chain in Mexico is currently compliant with the USMCA. We believe that products we ship from the United States to Canada are also compliant with the USMCA.

The tariffs on steel have increased certain input costs, and tariffs on China have raised the cost of chemicals used in our tracer diagnostics services business as existing inventory is consumed and replaced. Tariffs ultimately imposed by the U.S. administration—particularly those affecting Mexico, Canada, or China—could increase our cost of goods sold. 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. In addition, U.S. tariffs on Canadian energy exports could reduce drilling and completion activity by our Canadian customers, potentially lowering demand for our products and services in that market.

To counter inflationary pressures on the economy, central banks, including the U.S. Federal Reserve, raised benchmark interest rates several times prior to September 2024, actions typically intended to increase borrowing costs and moderate economic activity. Beginning in September 2024, the U.S. Federal Reserve began lowering rates, with additional reductions throughout 2025 amid improving inflation data and moderating employment growth. Additional rate reductions may be considered at upcoming meetings, depending on future economic data. The U.S. Federal Reserve continues to monitor the impact of tariff-related inflationary pressures and reciprocal trade actions, which may influence future monetary policy decisions.

Market Conditions

Oil and Natural Gas Drilling and Completion Activity

Oil and natural gas prices remain volatile. The average WTI crude oil price decreased to $65.39/BBL during 2025 compared to $76.63/BBL during 2024. This decline primarily reflects increased global supply, driven by higher production from both OPEC+ and non-OPEC+ countries, combined with a softer global macroeconomic environment that tempered demand growth. 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. Beginning in 2025, OPEC+ initiated a gradual phase out of these voluntary reductions. However, the group has reaffirmed its commitment to market stability and announced a pause in February and March 2026 due to seasonal demand patterns. 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. 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. LNG export capacity as well as the startup of LNG Canada and increased industrial demand, partially attributable to growing data center capacity. These factors were partially offset by higher production.

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Sustained significant declines in commodity prices, or sustained periods when the local pricing received in regional markets is below benchmark pricing, known in the industry as high differentials, 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.

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

Average Price

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

Average Drilling Rig Count

Quarter Ended U.S. Land Canada Land North America Land

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Over the past several years, North American E&P companies have been able to reduce their cost structures and have also utilized technologies, including ours, to increase efficiency and improve well performance. In the 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. 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. In Canada, we typically experience higher activity levels in the first quarter of each year, as our customers take advantage of the winter freeze to gain access to remote drilling and production areas. In the past, our revenue in Canada has declined during the second quarter due to warming weather conditions that result in thawing, softer ground, difficulty accessing well sites and road bans that curtail drilling and completion activity. Access to well sites typically improves throughout the third and fourth quarters in Canada, leading to activity levels that are higher than in the second quarter, but usually lower than activity in the first quarter. Canadian completions activity can be impacted by wildfires that are usually experienced in the spring and summer seasons, as well as shortages of water available to oil and gas operators. Our business activity can also be affected by customer spending patterns. In some years, customers in both the United States and Canada may exhaust their capital budgets before year-end or reduce their activities during the winter holidays in late December, 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. 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.

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. 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. Our services are provided at agreed-upon rates to customers for the provision of our downhole frac isolation assembly, which may include our personnel, and for the provision of tracer diagnostics services.

During periods of low drilling and well completion activity or as may be needed to compete in certain markets, we may, in some instances, lower the prices of our products and services. Our revenues are also impacted by 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.

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. Strengthening of the U.S. dollar, our reporting currency, relative to the Canadian dollar, would result in lower reported revenues, partially offset by lower reported cost of sales and selling, general and administrative (“SG&A”) expenses.

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

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Costs of Conducting our Business

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

Our SG&A expenses 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. 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 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.

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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.

Year Ended December 31, Variance

Revenues

Cost of sales

Change in fair value of contingent consideration 156 — 156 100.0 %

Other income (expense)

Provision for litigation, net of recoveries 881 — 881 100.0 %

Net income attributable to non-controlling interest 2,289 1,545 744 48.2 %

(1) NM — Percentage not meaningful

Year Ended December 31, Variance

Gross Margin and Gross Margin Percentage:

Product sales gross margin 37.0 % 36.0 %

Services gross margin 45.0 % 48.7 %

Total gross margin 39.4 % 39.9 %

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Year Ended December 31, Variance

Revenues by Geographic Area:

United States

Canada

Other Countries

Total

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. Revenue growth was driven primarily by an increase in product sales across all regions, as well as an increase in services revenue for the United States and Canada, partially offset by a decline in services revenue in international markets. In the United States, these increases were largely attributable to fracturing systems sales in the second quarter associated with two large projects, an increase in plug sales at Repeat Precision largely during the second half of the year, and an increase in tracer diagnostics revenues, which includes ResMetrics (total revenue contribution of $5.2 million, with $4.7 million reflected in the United States), acquired on July 31, 2025. Despite the decline in Canadian rig counts, results for Canada include an increase in product sales and services revenue reflecting higher activity levels for NCS in 2025, particularly for fracturing systems, a trend that began in the fourth quarter of 2024, continued throughout the first half of 2025, but began to reverse in the third quarter of 2025, as the Canadian rig counts began to decline. However, we continued to benefit from service work in more active regions, including the Montney basin. The increase in international product sales was driven by projects in both the Middle East and North Sea, with a decrease in international services revenue from tracer diagnostics, as the prior year included a greater volume of tracer revenues associated with large projects in Saudi Arabia. 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.

Cost of sales

Cost of sales was $111.2 million, or 60.6% of revenues, for the year ended December 31, 2025 as compared to $97.8 million, or 60.1% of revenues, for the year ended December 31, 2024. Overall, cost of sales as a percentage of revenues was modestly higher for these periods, although product margins improved slightly and service margins declined. Product margin is affected by changes in product mix, which depends on the characteristics of jobs completed—such as size, complexity, and lateral length—and on the type of product provided, including wellbore construction, completion equipment and plug-and-perf products. In addition, there was an increase in higher-margin international fracturing systems jobs in the North Sea in 2025 compared to 2024. Service margins declined primarily due to timing of international tracer diagnostics jobs and the number of fracturing service jobs, despite the favorable contribution from ResMetrics for the five months ended December 31, 2025. 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. 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.

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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. Of this $1.0 million increase in expense, $1.1 million was contributed by ResMetrics for the five-month period ended December 31, 2025. We also incurred $0.9 million of incremental stock-based compensation expense, primarily attributable to cash settled awards remeasured at the balance sheet date based on the price of our common stock, partially offset by lower professional fees, and decreases in research and development expense and travel and entertainment costs.

Depreciation

Depreciation totaled $5.0 million for the year ended December 31, 2025 compared to $4.6 million for the year ended December 31, 2024. 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 management company, as well as fixed assets added in connection with the ResMetrics acquisition.

Amortization

Amortization totaled $0.9 million for the year ended December 31, 2025 compared to $0.7 million for the year ended December 31, 2024. The increase is primarily associated with an increase in amortizable intangible assets due to the ResMetrics acquisition.

Provision for litigation, net of recoveries

The provision for litigation, net of recoveries represented $0.9 million in recoveries for the year endedDecember 31, 2025. In October 2025, the Court of Appeal overturned a prior finding of patent infringement against NCS, and remanded the matter to the trial court for further proceedings, with a redetermination hearing scheduled for September 2026. The Court of Appeal also reduced the costs award previously awarded against us from approximately $1.8 million to $0.9 million. Subsequently, the plaintiff refunded NCS $0.9 million in November 2025. See “Note 12. Commitments and Contingencies” to the accompanying consolidated financial statements for further discussion.

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. The decrease in other income was primarily attributable to the timing of when royalty income from licensees was recognized in 2024, as we began to accrue for such royalties in December 2024, resulting in incremental royalties of $1.2 million. In addition, we recorded an incremental $1.4 million benefit in 2024 associated with a technical services and assistance agreement with our local partner in Oman associated with a program that ended in November 2024, with final settlement in 2025.

Foreigncurrencyexchangegain (loss)

Foreign currency exchange gain was $0.9 million for the year ended December 31, 2025 compared to a loss of $3.0 million for the year ended December 31, 2024. 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. 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. During the year ended December 31, 2025, we reversed substantially all of the valuation allowance previously recorded against the deferred tax assets of our Canadian and U.S. operating subsidiaries due to sustained improvements in operating results, including a return to profitability and forecasts of future taxable income that are sufficient to realize the remaining deferred tax assets. During 2025, the valuation allowance decreased $15.3 million, reflecting utilization of NOLs and normal reversal of temporary differences due to timing, as well as discrete reversals in Canada and the United States of $1.6 million and $9.9 million, respectively. See further discussion of deferred tax valuation allowance at “Note 2. Summary of Significant Accounting Policies, Income Taxes” to the accompanying consolidated financial statements. 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.

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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. 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. 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. At December 31, 2025, our available borrowing base under the ABL Facility was $24.4 million, with no outstanding borrowings. As of December 31, 2025, we utilized letter of credit commitments of $0.2 million. 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.

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. 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. Our principal liquidity needs have been, and are expected to continue to be, capital expenditures, working capital, debt service and potential mergers and acquisitions.

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. 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. 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 liquidity and ability to meet our obligations and fund capital requirements also depend on our future financial performance including the ability to manage costs, which is subject to general economic, financial and other factors that are beyond our control. Accordingly, we cannot provide assurance that our business will generate sufficient cash flow from operations or that funds will be available from additional indebtedness, the capital markets or otherwise to meet our liquidity needs.

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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,

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. The increase in operating cash flow for the year ended 2025 reflected higher net income of $17.9 million, which includes the results from the ResMetrics acquisition, partially offset by higher cash payments for incentive bonuses, and higher payments related to the vesting of cash settled share-based awards, which are remeasured based on the price of our common stock. 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.

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 capital expenditures for property and equipment were lower in 2025 compared to 2024. In addition, in 2024, we received a cash inflow of $1.3 million associated with the liquidation of a company-owned life insurance policy (an investing activity), from which the proceeds were paid to settle obligations under a deferred compensation plan (an operating activity).

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. 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. 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.

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. Following the integration of ResMetrics into NCS and with lender approval, the borrowing base now includes eligible accounts receivable and inventory associated with ResMetrics. 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.

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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. 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. 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.

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.

Acquisition-Related Cash Requirement

In connection with the ResMetrics acquisition, contingent consideration was remeasured as of December 31, 2025, resulting in a payment obligation of $1.3 million, which was paid in January 2026. See “Note 3. Acquisition” to our consolidated financial statements for additional information.

CRA Tax Reassessment

In January 2026, our Canadian subsidiary received a NOR from the CRA relating to multiple tax years. While no liability has been recorded in our consolidated financial statements as of December 31, 2025 in accordance with ASC 740, Income Taxes, we may be required to make a deposit of approximately 50% of the assessed amount while the appeals process is underway. See “Note 17. Income Taxes” of our consolidated financial statements for further information.

Critical Accounting Estimates

The discussion and analysis of our financial condition and results of operations is derived from the review of our consolidated financial statements prepared in accordance with GAAP, which includes our interpretation of accounting guidance and application through accounting policies. See “Note 2. Summary of Significant Accounting Policies.” The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses. Certain of our accounting policies require the application of significant judgment by management in selecting the appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty. Our actual results may differ from these estimates. The accounting estimates that we believe to be the most critical to an understanding of our financial condition and results of operations and that require the most complex and subjective management judgments are discussed below.

Allowance for Credit Losses

We maintain an allowance for credit losses related to estimated losses that may result from the inability of our customers to make required payments. We evaluate collectability of customer accounts based upon credit approval practices, industry and customer historical experience as well as the current and projected financial condition of the specific customer. Amounts deemed to be uncollectible are applied against the allowance for credit losses. Our business has seasonality, and the balance of our outstanding receivables fluctuates during the fiscal year based upon activity levels, sales volume, and general industry conditions. We periodically record a provision for credit losses or recoveries. For the years ended December 31, 2025 and 2024, we recorded a recovery of credit losses of less than $0.1 million and a provision for credit losses of less than $0.1 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. 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. A 10% change in the level of concessions incurred within a fiscal year would not be deemed significant to our results of operations.

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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. Periodically, we evaluate our inventory to determine items that may be obsolete, slow-moving or in excess based upon historical sales experience and projected sales forecasts. Our estimates involve subjectivity and an evaluation of customer preferences over time which may impact our ability to recover the cost of inventory and generate a profitable return. 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 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.

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. We also perform an annual impairment analysis of goodwill as of December 31, or whenever there is a triggering event that indicates an impairment loss may have been incurred. Estimating future net cash flows requires us to make judgments regarding long-term forecasts of future revenues and costs related to the assets subject to review. These forecasts are uncertain in that they require assumptions about our revenue growth, operating margins, capital expenditures, future market conditions and technological developments. In addition, if we are required to determine the fair value of our reporting units to test goodwill for impairment, we must apply estimates, assumptions, and judgment regarding revenue growth, operating margins, capital expenditures, future market conditions, weighted average costs of capital and terminal growth rate, and we must evaluate the metrics of a deemed set of comparable companies and market earnings multiples. 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. 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. 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.

Business Combinations

We account for business combinations using the acquisition method of accounting, which requires us to allocate the purchase price to the assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. Any amounts paid above the fair value of identifiable net assets are recorded as goodwill. Determining these fair values involves significant judgment, including assumptions about changing market conditions, technological advances in the oil and natural gas industry or changes in regulations governing that industry. The most judgment-intensive estimates relate to identifying intangible assets, determining their fair values and the fair value of certain long-term tangible assets, and establishing useful lives for each. For significant acquisitions, we use independent valuation specialists to assist with these estimates.

Income Taxes

We are taxed as a corporation as defined under the Internal Revenue Code. 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. The realizability of deferred tax assets is evaluated annually and a valuation allowance is provided if it is more likely than not that the deferred tax assets will not give rise to future benefits. We recognize tax benefits from uncertain tax positions only if it is more likely than not that the tax position will be sustained, based upon technical merits, upon examination by the taxing authorities. If the income tax position is expected to meet the more likely than not criteria, the benefit recorded in the consolidated financial statements equals the largest amount that is greater than 50% likely to be realized upon its ultimate settlement. 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.

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. During 2025, our assessment included a reversal of substantially all valuation allowances in both Canada and the United States. See “Note 17. Income Taxes” of our consolidated financial statements for further information. Our financial statements could be materially affected if: (i) our actual results differ significantly from our forecast estimates; (ii) there are future changes in enacted tax laws with retroactive application; or (iii) tax authorities do not agree with our application of the tax law to our circumstances and the matter is not ultimately resolved in our favor. Furthermore, the determination of the more likely than not criteria and the weighting of positive and negative evidence in evaluating this criteria is subjective and can fluctuate from period to period based on actual performance relative to long-term forecasting and other factors.

In addition, we are routinely subject to tax audits and reviews in various jurisdictions around the world, which require significant judgment in evaluating uncertain tax positions. In January 2026, our Canadian subsidiary received a NOR from the CRA relating to multiple tax years, primarily associated with the disallowance of certain business expenses, including expenses subject to transfer pricing adjustments that are supported by annual third‐party transfer pricing studies. Management evaluated this matter in accordance with ASC 740, which provides a framework to evaluate uncertain tax benefits, and concluded that it is more likely than not that our tax positions will ultimately be sustained based on their technical merits. Accordingly, no liability related to this matter has been recorded in the consolidated financial statements as of December 31, 2025. This conclusion requires significant judgment and is subject to change based on future developments, including the outcome of administrative or judicial proceedings, additional information obtained during the appeals process, or changes in interpretations of applicable tax laws. If our assessment were to change, we could be required to record a material tax liability and incur significant penalties and interest associated with underpayment of tax associated with tax positions previously taken, either of which would impact income tax expense and net income in the period of change. See “Note 17. 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. 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. Our assessment of the likely outcome of litigation matters is based on our judgment of several factors, including experience with similar matters, prior history, precedents, relevant financial information and other evidence and facts specific to the matter. Although the outcome of any legal proceeding cannot be predicted with any certainty, if a settlement is deemed to be probable and estimable, management would consider relevant facts and circumstances to determine the potential range of loss exposure or gain on settlement, if any. 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. Summary of Significant Accounting Policies” to our consolidated financial statements for discussion of the accounting pronouncement we recently adopted and the accounting pronouncements recently issued by the Financial Accounting Standards Board (“FASB”).

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. 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.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Our financial position is exposed to a variety of risks, including commodity price risk, foreign currency exchange rate risk, interest rate risk and credit risk.

Commodity Price Risk

The market for our products and services is indirectly exposed to fluctuations in the prices of crude oil and natural gas to the extent such fluctuations impact drilling and completion activity levels and thus impact the activity levels of our customers in the E&P industry. Additionally, because we do not sell our products under long-term contracts, we believe we are particularly exposed to short-term fluctuations in the prices of crude oil and natural gas. We do not currently intend to hedge our indirect exposure to commodity price risk.

Foreign Currency Exchange Rate Risk

A substantial amount of our revenues is derived in Canada and, accordingly, our competitiveness and financial results are subject to foreign currency fluctuations where revenues and costs are denominated in Canadian dollars rather than USD. During 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, 2025, we had no outstanding indebtedness under our ABL Facility. Borrowings under the ABL Facility may be made in U.S. dollars with interest calculated using either the “ABR”, the “Adjusted Daily Simple SOFR” or the “Adjusted Term SOFR Rate”, and in Canadian dollars with interest calculated using the “Canadian Prime Rate” or the “Adjusted Term CORRA Rate” (each as defined in the amended and restated Credit Agreement). Borrowings bear interest plus a margin that varies depending on our leverage ratio as follows: (i) for ABR based loans, between 1.40% and 2.40%, and (ii) for Adjusted Daily Simple SOFR, Adjusted Term SOFR Rate, Canadian Prime Rate, and Adjusted Term CORRA Rate, between 2.40% and 3.40%. We must also pay a commitment fee calculated at 0.25% to 0.50% per annum, based on unused commitments. The applicable interest rate at 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. 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. 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. 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.

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Item 8. Financial Statements and Supplementary Data

INDEX TO FINANCIAL STATEMENTS

Page

CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Balance Sheets as of December 31, 2025 and 2024 62

Notes to Consolidated Financial Statements 67

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Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders

NCS Multistage Holdings, Inc.

Opinion on the financial statements

We have audited the accompanying consolidated balance sheets of NCS Multistage Holdings, Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income, changes in stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

Basis for opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical audit matters

Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.

/s/ GRANT THORNTON LLP

We have served as the Company’s auditor since 2021.

Houston, Texas

March 5, 2026

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NCS MULTISTAGE HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

December 31, December 31,

Assets

Current assets

Prepaid expenses and other current assets 2,031 2,063

Noncurrent assets

Identifiable intangibles, net 5,989 3,690

Deposits and other assets 586 712

Liabilities and Stockholders’ Equity

Current liabilities

Contingent purchase consideration 1,250 —

Current maturities of long-term debt 2,385 2,141

Noncurrent liabilities

Long-term debt, less current maturities 5,259 6,001

Operating lease liabilities, long-term 3,716 4,891

Other long-term liabilities 202 206

Deferred income taxes, net 398 186

Commitments and contingencies (Note 12)

Stockholders’ equity

Accumulated other comprehensive loss (86,132 ) (87,604 )

Total liabilities and stockholders' equity $ 181,199 $ 152,812

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

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NCS MULTISTAGE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

Year Ended December 31,

Revenues

Cost of sales

Selling, general and administrative expenses 58,845 57,820

Change in fair value of contingent consideration 156 —

Other income (expense)

Interest expense, net (251 ) (414 )

Provision for litigation, net of recoveries 881 —

Foreign currency exchange gain (loss) 891 (2,963 )

Income tax (benefit) expense (9,217 ) 116

Net income attributable to non-controlling interest 2,289 1,545

Net income attributable to NCS Multistage Holdings, Inc. $ 23,748 $ 6,593

Earnings per common share

Weighted average common shares outstanding

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

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NCS MULTISTAGE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

Year Ended December 31,

Foreign currency translation adjustments, net of tax of $0 1,472 (1,852 )

Comprehensive income attributable to non-controlling interest 2,289 1,545

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

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NCS MULTISTAGE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(In thousands, except share data)

Share-based compensation — — — — 2,747 — — — — — 2,747

Distribution to noncontrolling interest — — — — — — — — — (2,050 ) (2,050 )

Vesting of restricted stock — — 81,183 1 (1 ) — — — — — —

Currency translation adjustment — — — — — (1,852 ) — — — — (1,852 )

Share-based compensation — — — — 2,506 — — — — — 2,506

Distribution to noncontrolling interest — — — — — — — — — (2,700 ) (2,700 )

Vesting of restricted stock — — 49,624 — — — — — — — —

Currency translation adjustment — — — — — 1,472 — — — — 1,472

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

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NCS MULTISTAGE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

Year Ended December 31,

Cash flows from operating activities

Depreciation and amortization 5,885 5,316

Amortization of deferred loan cost 215 208

Provision for inventory obsolescence 857 1,136

Deferred income tax benefit (10,965 ) (380 )

Gain on sale of property and equipment (496 ) (506 )

Change in fair value of contingent consideration 156 —

(Recovery of) provision for credit losses (28 ) 41

Net foreign currency unrealized (gain) loss (1,693 ) 2,365

Proceeds from note receivable — 61

Changes in operating assets and liabilities:

Accounts receivable—trade (5,499 ) (9,154 )

Prepaid expenses and other assets 3,987 (1,087 )

Income taxes receivable/payable 134 34

Net cash provided by operating activities 22,175 12,725

Cash flows from investing activities

Purchases of property and equipment (1,201 ) (1,309 )

Purchase and development of software and technology (106 ) (70 )

Proceeds from sales of property and equipment 772 592

Acquisition of business, net of cash acquired (5,758 ) —

Proceeds from company-owned life insurance policy — 1,266

Net cash (used in) provided by investing activities (6,293 ) 479

Cash flows from financing activities

Payments on finance leases (2,222 ) (1,952 )

Payments of line of credit borrowings (2,338 ) (3,062 )

Treasury shares withheld (326 ) (267 )

Distribution to non-controlling interest (2,700 ) (2,050 )

Payment of deferred loan cost related to ABL Facility (55 ) —

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

Cash and cash equivalents beginning of period 25,880 16,720

Cash and cash equivalents end of period $ 36,725 $ 25,880

Supplemental cash flow information

Cash paid for income taxes (net of refunds) 1,612 431

Noncash investing and financing activities

Assets obtained in exchange for new finance lease liabilities 1,621 2,263

Assets obtained in exchange for new operating lease liabilities 405 3,056

Debt assumed in acquisition of business 324 —

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

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NCS MULTISTAGE HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Organization and Basis of Presentation

Organization

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

Basis of Presentation

Our accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). All intercompany accounts and transactions have been eliminated in consolidation. We consolidate Repeat Precision, LLC and its subsidiary (“Repeat Precision”), an entity in which we own a 50% interest and have a controlling voting interest, operating in the United States and Mexico. The other party’s 50% ownership interest is presented separately as a non-controlling interest. As a smaller reporting company (“SRC”), we have availed ourselves to certain reduced reporting requirements permitted by the Securities and Exchange Commission (“SEC”), including, among other things, presenting only two years of audited financial statements.

Note 2. Summary of Significant Accounting Policies

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and to disclose contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Such estimates include but are not limited to estimated losses on accounts receivables, estimated realizable value on excess and obsolete inventories, estimates related to fair value of reporting units for purposes of assessing possible goodwill impairment, expected future cash flows from long lived assets to facilitate impairment testing, share based compensation, estimates related to legal contingencies, valuation allowance for deferred taxes and income tax contingencies. Actual results could materially differ from those estimates.

Foreign Currency

Our reporting currency, and our functional currency in the United States, is the United States dollar (“USD”). The financial position and results of operations of our significant foreign subsidiaries are generally measured using the local currency as the functional currency. In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 830,Foreign Currency Matters, revenues and expenses of our significant foreign subsidiaries have been translated into USD at average exchange rates prevailing during the period. Assets and liabilities have been translated at the exchange rates on the balance sheet date. The resulting translation gain and loss adjustments have been recorded directly as a separate component of other comprehensive income in the accompanying consolidated statements of comprehensive income, and changes in stockholders’ equity.

Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are recorded as foreign currency exchange gains or (losses) as incurred in the consolidated statements of operations.

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NCS MULTISTAGE HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Revenue Recognition

We derive our revenues primarily from highly engineered products and support services. Revenues are based upon a purchase order, contract or other persuasive evidence of an arrangement with the customer that includes a fixed or determinable price, provided that collectability is reasonably assured, but such arrangements do not generally include right of return or other similar provisions or other significant post-delivery obligations. Sales and value added taxes that we collect concurrent with revenue-producing activities are excluded from revenue. We recognize revenue through the following steps: (i) identify the contract, (ii) identify the performance obligations, (iii) determine the transaction price, (iv) allocate the transaction price and (v) satisfy the performance obligation.

On occasion, we issue credits to our customers that are related specifically to the performance of our products or the services we provide, with such credits reducing the amount of revenue for the completed sales. These credits are infrequent, situation specific and recorded when the amount is realizable and estimable.

The payment terms and conditions in our customer contracts vary. We do not have contracts that contain a financing component and generally do not accept non-cash consideration from customers.

NCS has elected to recognize shipping and handling costs when control of the product transfers to the customer. These costs, net of any customer paid freight, are included in cost of sales in our consolidated statements of operations.

Product Sales Revenues

For product sale arrangements that are standard inventory products or modified inventory products with an alternative use, revenue is recognized at a point in time when control transfers. Control generally transfers upon shipment or delivery, and delivery is based on the customer instructions. Customers may also request bill and hold arrangements in writing. Once we have completed the bill and hold order, the products are segregated from the rest of inventory in the warehouse. The transaction price for product sales having a performance obligation is the price per unit times the unit quantity ordered and shipped to the customer or consumed at the well site.

Services Revenue

For service arrangements that do not have a contract provision with a right to a payment for services up to the date of termination, revenue is recognized when the job has been completed, which usually includes a customer signature or acknowledgement and when there are no additional services or future obligations required by us. The transaction price is determined by the contract unit day rate times the cumulative number of days of service provided upon the completion of the service and upon customer acceptance.

For service arrangements that do have a contract provision with a right to payment for services up to the date of termination, revenue is recognized over time using a unit rate (labor and materials) output method that corresponds to the value we would receive upon termination of the contract as of the end of the reporting period. The transaction price for the period end is determined by the contract unit rate times the cumulative number of units earned up to the reporting period less any revenue recognized in prior periods.

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NCS MULTISTAGE HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Cash and Cash Equivalents

We consider all highly liquid instruments purchased with an original maturity date of three months or less to be cash equivalents. These items are carried at cost, which approximates fair value.

In accordance with ASC 230,Statements of Cash Flow, cash flows from our significant foreign subsidiaries are calculated based on our functional currency. As a result, amounts related to changes in assets and liabilities reported in the consolidated statements of cash flows will not necessarily agree to changes in the corresponding balances on the consolidated balance sheets.

Concentration of Credit Risk

Financial instruments that potentially subject us to credit risk are cash and cash equivalents and trade accounts receivable. Cash balances are maintained in financial institutions which, at times, exceed federally insured limits. We monitor the financial condition of the financial institutions in which the accounts are maintained and have not experienced any losses in such accounts.

Substantially all of our sales are to customers whose activities are directly or indirectly related to the oil and gas industry. We generally extend short-term credit to these customers and, therefore, collectability of receivables is affected by market conditions in the oil and gas industry. We perform ongoing credit evaluations as to the financial condition of our customers with respect to trade accounts receivables. Generally, no collateral is required as a condition of sale.

During 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 accounts receivable as of the year then ended. No single customer individually accounted for 10% or more of our consolidated revenue or comprised 10% or more of our trade accounts receivable balance for the year ended December 31, 2024.

Accounts Receivable, Trade and Allowance for Credit Losses

Trade accounts receivable are recorded at their invoiced amounts and do not bear interest. We maintain an allowance for credit losses related to estimated losses that may result from the inability of our customers to make required payments. Earnings are charged with a provision for credit losses based on a current review of the collectability of customer accounts by management. Such provisions are based upon several factors including, but not limited to credit approval practices, industry and customer historical experience as well as the current and projected financial condition of the specific customer. Accounts deemed uncollectible are applied against the allowance for credit losses. The following table presents the changes in the allowance for credit losses for the years ended December 31, 2025 and 2024 (in thousands):

Allowance for credit losses at December 31, 2023 $ 165

Charges and additions during 2024 79

Adjustments and recoveries (220 )

Allowance for credit losses at December 31, 2024 $ 24

Charges and additions during 2025 44

Adjustments and recoveries (68 )

Allowance for credit losses at December 31, 2025 $ -

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NCS MULTISTAGE HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Inventories

Inventories consist primarily of raw material, product components, assembled products, certain components used to internally construct our frac isolation assemblies, and chemicals used in our tracer diagnostics services in raw materials or finished goods. Inventories are stated at the lower of cost or estimated net realizable value. Cost is determined at standard costs approximating the first-in, first-out or average cost basis. We routinely evaluate inventories, based on an analysis of inventory levels, historical sales experience and future sales forecasts, to determine obsolete, slow-moving and excess inventory. We utilize an excess and obsolete reserve to adjust such inventory to its estimated recoverable value, with an offset to cost of sales in the current period.

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. Should the review indicate that the carrying value is not fully recoverable, the amount of the impairment loss is determined by comparing the carrying value to the estimated fair value. We assess recoverability based on undiscounted future net cash flows. Estimating future net cash flows requires us to make judgments regarding long-term forecasts of future revenues and costs related to the assets subject to review. These forecasts are uncertain and require assumptions about our revenue growth, operating margins, capital expenditures, future market conditions and technological developments. If changes in these assumptions occur, our expectations regarding future net cash flows may change, which could result in a material impairment of the assets. There was no impairment of property and equipment and identifiable definite-lived intangible assets during the years ended December 31, 2025 and 2024. For the year ended December 31, 2024, we recognized an impairment charge of less than $0.1 million specific to an indefinite-lived intangible asset. See “Note 8. Property and Equipment” and “Note 9. Goodwill and Identifiable Intangibles” included herewith for further information.

An assessment of potential goodwill impairment indicators is performed annually or whenever there is a triggering event that indicates an impairment loss may have been incurred. If required, we typically perform an annual impairment test for goodwill using an assessment date in the fourth quarter of the fiscal year. Under GAAP, we have the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of one or more of our reporting units exceeds the related carrying amount. If, after assessing the totality of events or circumstances, we determine it is more likely than not that the fair value of a reporting unit exceeds the related carrying amount, there is no need to perform any further testing. However, if we conclude otherwise, then we are required to perform a quantitative impairment test by calculating the fair value of the reporting unit and comparing this value with the carrying value of the reporting unit. Alternatively, we could bypass the qualitative assessment for any reporting unit in any period and proceed directly to performing the quantitative goodwill impairment test. The fair value of the reporting unit is determined using a combination of a market multiple and a discounted cash flow approach. Determining the fair value of a reporting unit requires the use of estimates, assumptions and judgment. The principal estimates and assumptions that we use include revenue growth, operating margins, capital expenditures, future market conditions, weighted average costs of capital, a terminal growth rate, the set of comparable companies utilized, and the earnings metrics and multiples utilized. We believe that the estimates and assumptions used in our impairment assessments are reasonable. If the fair value of the reporting unit is less than the carrying amount, an impairment charge is recorded in the amount of the difference. No impairment charge associated with goodwill was recorded for the years ended December 31, 2025 and 2024. For additional information, see “Note 9. Goodwill and Identifiable Intangibles.”

Property and Equipment

Property and equipment are stated at historical cost adjusted for impairment, less accumulated depreciation. Equipment held under finance leases is stated at fair value which is typically the present value of the future minimum lease payments at the inception of the lease, less accumulated depreciation. Expenditures for property and equipment, including betterments that substantially increase the useful lives of the existing assets, are capitalized and then depreciated utilizing the straight-line method over the estimated useful lives of these assets. Any costs associated with constructed assets are capitalized as incurred, but do not begin to depreciate until placed into service. We typically do not capitalize interest associated with constructed assets unless the construction period extends for more than twelve months. Routine expenditures for repairs and maintenance are expensed as incurred. Depreciation is calculated over the estimated useful lives of the related assets using the straight-line method. Leasehold improvements and property under finance leases are amortized over the shorter of the remaining lease term or useful life of the related asset. Depreciation expense includes amortization of assets under finance leases. The cost and related accumulated depreciation of assets retired or otherwise disposed of are eliminated from the accounts, and any resulting gains or losses are recognized in the year of disposal as a component of other income, net.

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Depreciation on property and equipment, including assets held under finance leases, is calculated using the straight-line method over the following useful service lives or lease term (which includes reasonably assured renewal periods):

Years

Buildings 30

Building equipment and leasehold improvements 1 - 15

Machinery and equipment and service equipment 5 - 12

Computers and software 3 - 5

Furniture and fixtures 3 - 5

Vehicles 2 - 4

Right of use assets - finance leases (Lease term) 2 - 10

Business Combinations, Goodwill and Identifiable Intangible Assets

Business combinations are accounted for under the acquisition method of accounting in accordance with ASC 805,Business Combinations. Under the acquisition method of accounting, the total consideration transferred in connection with the acquisition is allocated to the tangible and intangible assets acquired, liabilities assumed, and any non-controlling interest in the acquiree based on their fair values. Goodwill acquired in connection with business combinations represents the excess of consideration transferred over the net tangible and identifiable intangible assets acquired. Certain assumptions and estimates are employed in evaluating the fair value of assets acquired and liabilities assumed. These estimates may be affected by factors such as changing market conditions, technological advances in the oil and natural gas industry or changes in regulations governing that industry. The most significant assumptions requiring judgment involve identifying and estimating the fair value of intangible assets and the associated useful lives for establishing amortization periods. To finalize purchase accounting for significant acquisitions, we utilize the services of independent valuation specialists to assist in the determination of the fair value of acquired tangible and intangible assets.

Costs incurred related to an acquisition or business combination, other than those associated with the issuance of debt or equity securities, are expensed as incurred. Any contingent consideration payable is recognized at fair value at the acquisition date. Liability-classified contingent consideration is remeasured each reporting period with changes in fair value recognized in earnings until the contingent consideration is settled.

All identifiable definite-lived intangibles are amortized on a straight-line basis over the estimated useful life or term of related agreements. Certain costs incurred in the development of internal-use software applications are capitalized, while costs incurred outside of the software application development stage are expensed as incurred. The amounts capitalized are included in intangible assets, categorized as internally developed software, and are amortized on a straight-line basis over the estimated useful life of the software when ready for the intended use. These assets are tested for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable.

Leases

We determine if a contract contains a lease at the inception of an arrangement. If so, we record a right of use (“ROU”) asset representing the right to use an underlying asset for the lease term and a lease liability representing an obligation to make lease payments arising from the lease on the consolidated balance sheet.

We have operating and finance leases for facilities, vehicles, equipment, and software. Some leases include one or more options to renew, with renewal terms that can extend the lease term from five to ten years with exercise of lease renewal options being at the sole discretion of NCS as lessee. Some leases may include an option to terminate the contract with notice. ROU assets and lease liabilities recorded pursuant to a lease agreement with a term exceeding 12 months are recognized at fair value on the lease commencement date based on the present value of future lease payments for the lease term, discounted at the implicit interest rate. For lease agreements where we cannot readily determine the implicit interest rate, we use our incremental borrowing rate to calculate the present value of lease payments at the commencement date. This rate is based on our secured asset-based revolving credit facility (“ABL Facility”) interest rate, which is adjusted monthly. Lease expense for operating leases is recognized on a straight-line basis over the lease term.

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Our lease agreements are from a lessee perspective and do not contain (i) any leases with variable lease payments (e.g., payments that depend on a percentage of sales of a lessee or payments that increase based upon an index such as a consumer price index), (ii) residual value guarantees probable of being paid, except leased fleet vehicles, or (iii) material restrictive covenants. Lease agreements with lease and non-lease components are generally accounted for separately when practical. For leases where the lease and non-lease component are comingled and the non-lease component is determined to be insignificant when compared to the lease component, the lease and non-lease components are treated as a single lease component for all asset classes.

As of December 31, 2025, we have no significant leases where we are the lessor, and we have no significant operating or finance lease commitments that have not yet commenced which create significant rights or obligations for NCS. For additional information, see “Note 11. Debt” and “Note 16. Leases.”

Income Taxes

We are taxed as a corporation as defined under the Internal Revenue Code. 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. The realizability of deferred tax assets is evaluated annually and a valuation allowance is provided if it is more likely than not that the deferred tax assets will not give rise to future benefits.

We follow guidance in ASC 740,Income Taxes, for uncertainty in income taxes by prescribing the minimum recognition threshold an income tax position is required to meet before being recognized in the consolidated financial statements. Each income tax position is assessed using a two-step process. A determination is first made as to whether it is more likely than not that the income tax position will be sustained, based upon technical merits, upon examination by the taxing authorities. If the income tax position is expected to meet the more likely than not criteria, the benefit recorded in the consolidated financial statements equals the largest amount that is greater than 50% likely to be realized upon its ultimate settlement. We recognize accrued interest and penalties related to uncertain tax positions in other income, net on the consolidated statements of operations.

Share-Based Compensation

We account for our stock-based compensation awards in accordance with ASC 718,Compensation—Stock Compensation. To measure the grant-date fair value of share-based compensation, we use the market price of our common stock for equity-classified restricted stock units (“RSUs”) and equivalent stock units, or cash-settled, liability-classified RSUs (“ESUs”), the Black-Scholes model for options and a Monte Carlo simulation for the performance stock unit awards (“PSUs”). We measure all share-based compensation awards at fair value on the grant date and recognize the compensation expense in the financial statements over the requisite period and record forfeitures as they occur. As the ESUs will be settled in cash, we record a liability, which is remeasured each reporting period at fair value based upon the closing stock price of our common stock until the awards are settled.

Fair Value

The carrying amounts for financial instruments classified as current assets and current liabilities approximate fair value due to the short maturity of such instruments. The book values of other financial instruments approximates fair value because interest rates charged are comparable to other financial instruments with similar terms and maturities and the rates vary in accordance with a market index consistent with ASC 820,Fair Value Measurements.

For the financial assets and liabilities disclosed at fair value, fair value is determined as the exit price, or the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The established fair value hierarchy divides fair value measurement into three broad levels:

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The financial assets and liabilities presented at fair value for disclosure purposes are categorized in one of the above three levels based on the lowest level input that is significant to the fair value measurement in its entirety. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment.

Earnings Per Share

Basic earnings per share is calculated by dividing net income attributable to NCS Multistage Holdings, Inc. by the weighted-average number of common shares outstanding during the period. Diluted earnings per share is calculated by dividing net income attributable to NCS Multistage Holdings, Inc. by the weighted-average number of common shares outstanding during the period, taking into effect, if any, shares that would be issuable upon the exercise of outstanding stock options and unvested RSUs and PSUs calculated using the treasury stock method, a method that determines how many incremental shares would result if all dilutive shares were exercised at the reporting date, less the number of shares that could be purchased at cost using the assumed proceeds from the exercise.

Research and Development

Research and development costs are incurred both through the utilization of our employees to create and develop new ideas and products as well as through engaging third parties to perform development activities under our coordination and management. We incurred approximately $2.0 million in research and development costs for each of the years ended December 31, 2025 and 2024, respectively. These costs are recorded in selling, general and administrative (“SG&A”) expenses on the consolidated statements of operations. Occasionally a customer may contract us to provide research and development of a product, for which we are compensated. When the project is completed and accepted by the customer, we recognize the revenue and record the corresponding research and development costs as cost of goods sold. Alternatively, outside parties may agree to fund certain research and development activities for which we retain the rights to intellectual property. Proceeds we receive under these arrangements are treated as a reduction of research and development costs included in SG&A expense. We received such reimbursable amounts of less than $0.1 million and $0.3 million during the years ended December 31, 2025 and 2024, respectively. Proceeds received from research and development efforts performed under a collaborative arrangement, for which we do not retain the rights to intellectual property, are recorded as other income and the corresponding costs are included in SG&A expenses.

Recent Accounting Pronouncements

Pronouncement Adopted in 2025

In December 2023, the FASB issued Accounting Standards Update (“ASU”) No.2023-09,Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU improves income tax disclosures including a requirement to present specific categories in the effective tax rate reconciliation, additional information for reconciling items that meet a quantitative threshold, certain disclosures pertaining to income taxes paid (net of refunds received) and amendments to other disclosure requirements. The new standard is effective for annual periods beginning after December 15, 2024, and should be applied prospectively although retrospective application is permitted. We adopted ASU No.2023-09 on December 31, 2025 and have included the required disclosures within this Annual Report on Form 10-K (“Form 10-K”), with retrospective application. See “Note 17. Income Taxes.”

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Pronouncement Not Yet Effective

In September 2025, the FASB issued ASU No.2025-06,Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40):Targeted Improvements to the Accounting for Internal-Use Software. This ASU modernizes the accounting for internal-use software costs to be less prescriptive, allowing capitalization once management has authorized and committed to a software project that is deemed probable to complete, without significant development uncertainty. In addition, this pronouncement clarifies that certain disclosures for capitalized internal-use software intangible assets are not required and amends existing guidance on website development cost. The new standard is effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Early adoption is permitted. We are currently evaluating the impact of the adoption of this guidance.

In July 2025, the FASB issued ASU No.2025-05,Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. This ASU provides a practical expedient for all entities to forego an evaluation of forecast information when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions under Topic 606. The new standard is effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted. We adopted this guidance on January 1, 2026, with no significant impact on our consolidated financial statements.

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

Note3.Acquisition

On July 31, 2025, we acquired 100% of the equity interests of Reservoir Metrics, LLC, and its related entities (“ResMetrics”), a provider of tracer diagnostics services, for $7.1 million, on a cash-free, debt-free basis. Purchase consideration consists of $5.8 million in cash, including a working capital adjustment, $0.3 million of debt assumed and a $1.1 million initial estimate of contingent consideration, payable solely depending on changes in international trade tariffs for certain chemical imports from the date of acquisition through the measurement date of December 31, 2025. We remeasured the contingent consideration and increased this liability to $1.3 million, presented separately on the accompanying balance sheet, and recognized the change in fair value of the contingent consideration as an expense of $0.2 million for the year ended December 31, 2025. The contingent consideration was paid in January 2026. We believe the purchase of ResMetrics further expands and complements our existing tracer diagnostics offerings.

The purchase price is allocated to the estimated fair value of assets acquired and liabilities assumed as of the acquisition date. Goodwill is calculated as the excess of consideration transferred over the fair value of the net assets recognized. The fair value of the assets and liabilities of ResMetrics were determined utilizing a third-party valuation for certain long-term assets and intangibles, as well as various preliminary estimates and assumptions we believe are reasonable based on currently available information. The purchase price allocation is preliminary as of December 31, 2025, and may change as we continue to analyze information. We recognized goodwill of $1.2 million associated with this transaction, which we expect to be fully deductible for income tax purposes. Future changes to the purchase price allocation may result in a corresponding change in goodwill. We do not expect any future adjustments to significantly change the purchase price allocation as presented as of December 31, 2025.

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We have expensed acquisition costs related to this transaction of $0.2 million as general and administrative expense on the accompanying statements of operations for the year ended December 31, 2025.

The following table presents the preliminary purchase price allocation as of the acquisition date for the ResMetrics business combination (in thousands):

Consideration

Cash consideration $ 7,853

Debt assumed 324

Initial estimate of contingent consideration 1,064

Less: Cash acquired (2,095 )

Total consideration $ 7,146

Preliminary purchase price allocation

Accounts receivable $ 2,744

Prepaid expenses and other current assets 180

Property and equipment 716

Intangible assets 3,192

Other long-term assets 19

Total identifiable assets acquired 7,162

Accounts payable—trade 144

Accrued expenses and other current liabilities 1,037

Total liabilities assumed 1,181

Net identifiable assets acquired 5,981

Net assets acquired $ 7,146

Definite-lived intangible assets acquired were $3.2 million, primarily associated with customer relationships. The intangible assets are amortized on a straight-line basis over the estimated useful lives of approximately six years, resulting in amortization expense of $0.2 million for the period from the date of inception to December 31, 2025.

ResMetrics has contributed revenue and income before tax of $5.2 million and $1.5 million, respectively, to our consolidated results for the year ended December 31, 2025. We have prepared unaudited pro forma information, as if the acquisition occurred on January 1, 2024, based on available information and certain assumptions we believe are reasonable, including: (i) adjustments for depreciation and amortization of the fair value of acquired intangibles and fixed assets, (ii) accounting policy conforming changes, (iii) elimination of interest income that could have been earned on invested cash associated with the purchase price, (iv) tax effect on earnings of ResMetrics and pro forma adjustments assuming a statutory rate of 21%, and (v) other adjustments deemed appropriate. The pro forma combined financial information has been included for comparative purposes and is not necessarily indicative of the results that might have actually occurred had the ResMetrics acquisition taken place on January 1,2024; furthermore, the financial information is not intended to be a projection of future results. The following table summarizes our unaudited selected financial information on a pro forma basis (in thousands):

Pro Forma (Unaudited)

Year Ended December 31,

Net income attributable to NCS Multistage Holdings, Inc. $ 24,435 $ 7,251

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Note 4. Segment and Geographic Information

We sell the following complementary products and services largely to exploration and production customers in the oil and gas industry: fracturing systems and enhanced recovery systems products and the provision of related services, casing buoyancy systems, liner hanger systems and toe initiation sleeves products as well as sales of our tracer diagnostics services. In addition, we sell composite and dissolvable frac plugs, setting tools, perforating guns and related products through Repeat Precision, our 50% owned entity. Our complementary products and services are typically used by our customers to facilitate the construction and completion of horizontal wellbores and to provide diagnostic information that customers can utilize to improve upon their completion techniques in subsequent wells.

We have one reportable segment as we manage our activities on a consolidated basis applying qualitative factors including the nature of the products and services, the nature and commonality of production processes, a shared customer base primarily in North America, the scope of geographic operations and a common industry and regulatory environment. The accounting policies of our one reportable segment are the same as those described in the summary of significant accounting policies. Our CODM is the Chief Executive Officer.

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

Our CODM utilizes the GAAP measures of net income and cash flow from operations as primary measures of profitability and cash flow, respectively, as well as secondary non-GAAP measures of Adjusted EBITDA and free cash flow (cash flow from operations less capital expenditures). The CODM assesses performance using these measures, and he decides how to allocate resources (including capital expenditures, financial resources and employees) through an integrated annual budget and more frequent forecasting processes, with the annual budget subject to approval by our Board of Directors (“Board”). The CODM allocates resources in a manner that he believes will maximize value for the consolidated corporate entity and its stockholders. The CODM considers variances from actual to budget, our most recent estimate and the prior year on a monthly basis when making decisions about the allocation of operating and capital resources. The CODM also regularly reviews consolidated cash flow, as well as the non-GAAP measure of free cash flow. The CODM assesses business performance consistent with the presentation on our consolidated financial statements supplemented with a review of certain significant SG&A expense categories. Such expenses are reviewed on a with and without basis for business combinations, until fully integrated into actual results for all periods presented.

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

Year Ended December 31,

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

Year Ended December 31,

United States

Canada

Other Countries

Total

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

December 31, December 31,

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Note 5. Revenues

Disaggregation of Revenue

We sell our products and services primarily in North America and in selected international markets. See above “Note 4. Segment and Geographic Information” for our disaggregated revenue by geographic area.

Contract Balances

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

The following table presents the current contract liabilities for the periods indicated (in thousands):

Revenue recognized (515 )

Revenue recognized (1,103 )

We currently do not have any contract assets or non-current contract liabilities. Our contract liability as of December 31, 2025 and 2024 is included in other current liabilities on the applicable accompanying consolidated balance sheets. Our performance obligations for our product sales and services revenue are typically satisfied before the customer’s payment; however, prepayments may occasionally be required.

Contracts with Multiple Performance Obligations

Substantially all of our product sales and services revenue are considered a single performance obligation. Our tracer self-service product line, which constitutes a small percentage of our total revenue for the years ended December 31, 2025 and 2024, is comprised of two performance obligations: (i) the delivery of tracer materials to a customer well site and (ii) the creation of diagnostic reports ordered by customers when we do not perform an integrated service. For these contracts, we do not allocate the transaction price as the individual performance obligations are sold at standalone prices in the customer order. The transaction prices for our self-service product line are determined as (i) the price per unit times the quantity of tracer materials and (ii) prices charged for diagnostic reports ordered by and delivered to the customer.

Practical Expedients

We generally expense sales commissions when incurred because the amortization period would have been one year or less. These costs are recorded within SG&A expenses on the consolidated statements of operations.

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

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Note 6. Inventories, net

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

December 31, December 31,

Note 7. Other Current Receivables

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

December 31, December 31,

Current income tax receivables $ 2,091 $ 1,743

Total other current receivables $ 3,644 $ 5,143

Employee receivables primarily consist of amounts paid by us for foreign withholding tax paid on behalf of employees working on international assignments, which is expected to be reimbursed to us by the employees when refunded as foreign tax credits on their home-country tax returns. Other receivables as of December 31, 2025 and 2024, included the following: a receivable of $1.0 million and $1.1 million, respectively, associated with license agreements, for amounts owed from the quarter that are deemed probable and estimable, but not yet received as of the balance sheet date. At December 31, 2024, we also had a receivable of $1.4 million, net of withholding tax, associated with a technical services and assistance agreement with our local partner in Oman, pursuant to a collaborative arrangement that ended in November 2024. We collected the receivable from our Omani partner in 2025.

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Note 8. Property and Equipment

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

December 31, December 31,

Less: Accumulated depreciation and amortization (26,749 ) (23,519 )

Construction in progress 211 226

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

Year Ended December 31,

Cost of sales

Selling, general and administrative expenses 1,978 1,923

The table above includes depreciation expense associated with finance leases for buildings, equipment and software, as well as vehicles for our transportation fleet. See “Note 16. Leases.”

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

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Note 9. Goodwill and Identifiable Intangibles

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

December 31, December 31,

We perform an annual impairment analysis of goodwill as of December 31, or whenever there is a triggering event that indicates an impairment loss may have been incurred. If an impairment loss occurs, we disclose such a loss separately in the consolidated statements of operations, as applicable. See “Note 2. Summary of Significant Accounting Policies, Impairments” for additional information. We perform our impairment analysis at a reportable unit level, evaluated separately for Repeat Precision and for the remaining NCS business. During 2025, we recorded goodwill totaling $1.2 million associated with the ResMetrics acquisition, allocated to our tracer diagnostics services group within the NCS reportable unit. See “Note 3. Acquisition”. As of December 31, 2025, goodwill associated with Repeat Precision and the NCS reportable unit totaled $15.2 million and $1.2 million, respectively.

As of December 31, 2025 and 2024, we elected to perform a qualitative assessment for our reportable units with goodwill, and determined it is more likely than not that the goodwill totaling $16.4 million and $15.2 million, respectively, has a fair value that exceeds its net carrying value. Therefore, no goodwill impairment has been recorded for the years ended December 31, 2025 and 2024, respectively.

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

Estimated

Useful Gross

Lives Carrying Accumulated Net

(Years) Amount Amortization Balance

Estimated

Useful Gross

Lives Carrying Accumulated Net

(Years) Amount Amortization Balance

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Excluding intangible assets acquired through the ResMetrics business combination in 2025, we did not incur costs to renew or extend the term of acquired intangible assets during the years ended December 31, 2025 and 2024. Prior to the acquisition of ResMetrics, our intangible assets were primarily attributable to Repeat Precision. However, the acquisition has contributed identifiable intangible assets to the tracer diagnostics services group as of December 31, 2025.

Identifiable intangibles are tested for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. See “Note 2. Summary of Significant Accounting Policies, Impairments” for additional information. As of December 31, 2024, we determined that the carrying value of our indefinite-lived intangible asset was no longer recoverable and the associated fair value was zero. Therefore, we recorded an impairment charge of less than $0.1 million in 2024 to retire this indefinite-lived asset, which was recognized in amortization expense in our consolidated statements of operations. We evaluated potential triggering events and determined there were no triggering events that indicated potential impairment of our identifiable definite-lived intangibles. Therefore, we did not record any impairment charges related to our identifiable intangibles with definite lives for the years ended December 31, 2025 or 2024, respectively.

Total amortization expense, which is associated with SG&A expenses on the consolidated statements of operations, was $0.9 million and $0.7 million for the years ended December 31, 2025 and 2024, respectively.

The total weighted average amortization period for intangible assets is 10 years and estimated future amortization expense by year is as follows (in thousands):

Note 10. Accrued Expenses

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

December 31, December 31,

Accrued payroll and bonus $ 8,423 $ 7,601

Property and franchise taxes accrual 386 251

Accrued other miscellaneous liabilities 652 499

Accrued payroll and bonus includes an annual incentive bonus accrual based on operating performance of $6.8 million and $6.1 million as of December 31, 2025 and 2024, respectively, which is generally paid during the first quarter of the following year.

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Note 11. Debt

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

December 31, December 31,

ABL Facility $ — $ —

Repeat Precision Promissory Note — —

The estimated fair value of total debt as of December 31, 2025 and 2024 was $6.9 million and $7.2 million, respectively. The fair value of the finance leases was estimated using Level 2 inputs by calculating the sum of the discounted future interest and principal payments at our incremental borrowing rate through the date of maturity.

Below is a description of our financing arrangements.

ABL Facility

In May 2022, we entered into an ABL Facility, where credit availability is subject to a borrowing base calculation. The ABL Facility is governed by the Credit Agreement between NCS Multistage Holdings, Inc. (“NCSH”), Pioneer Investment, Inc., NCS Multistage, LLC, NCS Multistage Inc., the other loan parties thereto, the lenders party thereto, and JPMorgan Chase Bank, N.A., as administrative agent and as a lender under the facility provided therein (the “Credit Agreement”). In April 2024, we amended the Credit Agreement to modify the benchmark that may be used for loans in Canadian dollars (“CAD”) in connection with the cessation of the CDOR Rate and transition to the CORRA Rate. The ABL Facility is scheduled to mature in May 2027.

The ABL Facility is a revolving credit facility with an aggregate principal amount of $35.0 million, of which borrowing up to $10.0 million can be made in Canadian dollars and funding of $7.5 million can be available for letters of credit. Total borrowings available under the ABL Facility may be limited subject to a borrowing base calculated 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. Our available borrowing base under the ABL Facility as of December 31, 2025 was $24.4 million. As of December 31, 2025 and 2024, we had no outstanding indebtedness under the ABL Facility. As of December 31,2025, we utilized letter of credit commitments of $0.2 million.

Borrowings under the ABL Facility may be made in U.S. dollars with interest calculated using either the “ABR”, the “Adjusted Daily Simple SOFR” or the “Adjusted Term SOFR Rate”, and in Canadian dollars with interest calculated using the “Canadian Prime Rate” or the “Adjusted Term CORRA Rate” (each as defined in the amended and restated Credit Agreement). Borrowings bear interest at a rate equal to the benchmark plus a margin that varies depending on our leverage ratio as follows: (i) for ABR based loans, between 1.40% and 2.40%, and (ii) for Adjusted Daily Simple SOFR, Adjusted Term SOFR Rate, Canadian Prime Rate, and Adjusted Term CORRA Rate, between 2.40% and 3.40%. We must also pay a commitment fee calculated at 0.25% to 0.50% per annum, based on unused commitments. The applicable interest rate at December 31, 2025 was 6.3%. We incurred interest expense related to the ABL Facility, including commitment fees, of $0.2 million for each of the years ended December 31, 2025 and 2024.

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The obligations of the borrowers under the ABL Facility are guaranteed by NCSH and each of our U.S. and Canadian subsidiaries (other than Repeat Precision) and are secured by substantially all of the assets of NCSH and its subsidiaries, in each case, subject to certain exceptions and permitted liens.

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

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

We capitalized direct costs of $1.0 million in connection with the Credit Agreement, and approximately $0.1 million associated with subsequent amendments, each of which is being amortized over the remaining term of the ABL Facility using the straight-line method. Amortization of the deferred financing charges of $0.2 million for each of the years ended December 31, 2025 and 2024, was included in interest expense, net.

Repeat Precision Promissory Note

In February 2018, Repeat Precision entered into a promissory note with Security State Bank & Trust, Fredericksburg (the “Repeat Precision Promissory Note”). The Repeat Precision Promissory Note has been renewed annually and was most recently renewed in May 2025 with an aggregate borrowing capacity of $2.5 million, a reduction from $4.3 million in the prior year. The Repeat Precision Promissory Note is scheduled to mature in May 2026 and bears interest at a variable interest rate equal to prime plus 1.00%. The applicable interest rate at December 31, 2025 was 7.8%. The Repeat Precision Promissory Note is collateralized by certain equipment, inventory and receivables of Repeat Precision. Total borrowings may be limited subject to a borrowing base calculation, which includes a portion of Repeat Precision’s eligible receivables, inventory and equipment. As of December 31, 2025 and 2024, there was no outstanding indebtedness under the promissory note and the available borrowing base was $2.5 million at December 31, 2025. Repeat Precision’s indebtedness is guaranteed by its subsidiary and is not guaranteed by NCSH or any other NCS entity.

Finance Leases

We lease assets under finance lease arrangements, including an office and laboratory in Tulsa, Oklahoma, facilities in Odessa, Texas, and certain operating equipment and software. We also maintain a vehicle leasing arrangement with a fleet management company through which we lease light vehicles and trucks that meet the finance lease criteria. See “Note 16. Leases” for additional information.

Note 12. Commitments and Contingencies

Litigation

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

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Canada Patent Matters

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

In October 2023, the trial judge rendered a decision against us holding that our asserted patents are invalid and that we were infringing the Kobold asserted patent. The Canada Court ordered us to pay Kobold approximately $1.8 million in costs and disbursements, including taxes payable thereon, and granted an injunction prohibiting us from any further infringement of their patent. This amount was paid to Kobold in November 2023. We filed an appeal with the Court of Appeal of Canada (“Court of Appeal”), which was heard in April 2025.

In July 2024, Kobold filed a motion with the Canada Court regarding whether the injunction allowed us to modify our product or, as Kobold contends, we needed to destroy or deliver the product to Kobold. This matter has been stayed by the parties pending the resolution of the redetermination described below. If the Canada Court agrees with Kobold, a fine or other remedy may be imposed against the Company.

In October 2025, the Court of Appeal found that the trial judge erred in construing Kobold’s patent claims and set aside the findings of infringement, the permanent injunction, and the costs award. The Court of Appeal remitted the case back to the trial court to reconsider whether Kobold's patent is invalid for double patenting (claiming the same invention in two different patents), with the redetermination hearing scheduled for September 2026. The Court of Appeal reduced the costs award from approximately $1.8 million to approximately $0.9 million and further indicated that if Kobold's patent is found invalid on remand, the costs award may be further reduced or eliminated. As a result of the reduced costs award, Kobold returned $0.9 million to NCS in November 2025, presented as a benefit in the provision for litigation, net of recoveries in the accompanying consolidated statement of operations for the year ended December 31, 2025.

While the Court of Appeal’s reasoning indicates that Kobold’s patent may be found invalid on remand, we cannot predict with certainty the outcome of the remand proceedings. If Kobold’s patent is ultimately upheld as valid and we are found to infringe, damages would then be determined by the Canada Court, which would likely extend for one or more years after the remand decision. We would expect any damages awarded to be modest because of the relative ease and minimal cost incurred to implement changes to our product, with such changes resulting in no significant commercial impact to date. As of December 31,2025, we believe a loss is reasonably possible but not probable, and any potential loss is not reasonably estimable.

● In April 2020, Kobold filed a separate patent infringement lawsuit seeking unspecified damages against us in the Canada Court, alleging that our fracturing tools infringe their Canadian patents. In the summary judgment phase, we successfully had claims relating to some of our products dismissed. We believe we have strong arguments of invalidity and non-infringement as to all remaining claims in this matter. We expect the trial for this matter to be heard in the fourth quarter of 2026.

Other Patent Matters

In connection with patent infringement claims we asserted regarding U.S. Patent No.10,465,445 (“the ’445 Patent”), we received favorable jury verdicts against Nine Energy Services, Inc. (“Nine”) and TCO AS (“TCO”) in the Western District of Texas, Waco Division (“Waco District Court”). In January 2022, the jury awarded NCS approximately $0.5 million in damages against Nine, and in August 2022, the jury awarded NCS approximately $1.9 million in damages against TCO. At subsequent hearings in December 2022 and May 2024, respectively, the Waco District Court awarded supplemental damages, interest, and costs, and ordered both Nine and TCO to pay ongoing royalties for their sales of infringing casing flotation devices for the life of the ’445 Patent. As of December 31, 2025, Nine and TCO have posted security totaling over $7.5 million to secure the judgments pending their appeal.