NCS Multistage Holdings, Inc. Q2 FY2026 earnings call

• Overall Q2 2026 Financial Performance • Delivered total revenue of $1.105 billion, adjusted EBITDA of $223 million (20.2% margin), and adjusted free cash flow of $139 million, representing 62.3% conversion of adjusted EBITDA to free cash flow • Adjusted net working capital as a percentage of revenue improved 90 basis points sequentially to 27%, the second consecutive quarter of improvement, driven by better receivables and payables management • Capital expenditures totaled $42 million (3.8% of revenue), down $12 million year-over-year, remaining within the company's targeted 3-5% of revenue range • Returned $36 million to shareholders in Q2 ($20 million in dividends, $16 million in share repurchases), bringing cumulative shareholder returns to over $370 million since the program launch • Ended the quarter with $1.14 billion in cash/restricted cash, total liquidity of $1.7 billion, and a net leverage ratio of 0.34x, an investment-grade level

• Regional Operational Highlights • Middle East: Q2 activity remained disrupted by ongoing regional conflict, with activity suspensions, project deferrals, and elevated logistics costs; the first half financial impact ($30-$50 million) was in line with prior guidance. The company prioritized employee safety and customer business continuity, and activity showed early signs of recovery by quarter-end, though recent flare-ups have kept near-term uncertainty high. The company concluded its LSDK contract in Saudi Arabia, and is comfortable walking away from the contract due to current low market pricing, while maintaining a strong presence and focusing on technology-driven growth in the kingdom. The company completed an integrated contract with PDO in Oman 14 months ahead of schedule and won a 3-year Marmool extension contract starting Q3. • Latin America: Revenue declined sequentially, driven by lower-than-expected activity and deferred wells in Mexico. Collections from the company's largest Mexican customer were strong, supporting working capital, and the company has aligned its cost structure and footprint to current activity levels. Progress in Venezuela has exceeded expectations, with a growing opportunity pipeline, and management expects Venezuela to deliver tangible revenue and margin contributions in 2027. • ESSR (Europe, Sub-Saharan Africa, Russia): Revenue grew sequentially on higher activity, though a union strike in Norway created headwinds that will extend into Q3. Russia's share of total company revenue increased primarily due to revenue declines in other regions, especially the conflict-impacted Middle East.

• Strategic Updates • Multiple new high-quality deepwater contract wins during the quarter across Brazil, West Africa, and Australia, plus other key wins in Kuwait, Thailand, and Oman; most MPD awards will ramp up and start contributing revenue in Q4 2026. • Proposed redomestication: The initial proposal to redomesticate to Texas failed to meet the 75% approval requirement under Irish law; management has submitted an updated proposal to redomesticate to Delaware, with a shareholder vote scheduled for September 3. The move is expected to generate $20-$30 million in annual cash savings starting 2027, and will not change the company's global footprint or operations. • Definitive agreement to acquire NCS Multistage, which expands Weatherford's completions portfolio, adds full well lifecycle coverage, deepens exposure to unconventional resources globally, and leverages NCS's capital-light business model on Weatherford's global customer base. The deal is structured primarily as equity, is expected to close in H2 2026, and is projected to deliver at least $15 million in annual cost synergies within 18 months of closing.

Weatherford operates three core product segments, all of which reported year-over-year revenue declines in Q2 2026: 1. WCC: Revenue declined 5% year-over-year, driven by lower activity in the Middle East and North Africa (MENA) region. This decline was partially offset by higher completions activity in Latin America. 2. DRE: Revenue declined 13% year-over-year, primarily due to lower wireline and drilling-related services activity in MENA. Higher managed pressure drilling activity in ESSR (Europe, Sub-Saharan Africa, Russia) partially offset the decline. 3. PRI: Revenue declined 3% year-over-year, primarily from lower artificial lift activity in North America and Latin America. No absolute revenue figures or segment revenue contribution percentages were provided in the transcript.

• Third Quarter 2026 Guidance • Revenue is expected to be in the range of $1.105 billion to $1.155 billion • Adjusted EBITDA is expected to be between $235 million and $265 million, representing a 100+ basis point sequential increase in adjusted EBITDA margin • Adjusted free cash flow is expected to exceed $100 million

• Full Year 2026 Guidance • Revenue is now projected to be in the range of $4.54 billion to $4.80 billion • Adjusted EBITDA is expected between $951 million and $1.046 billion, with the midpoint reduced by only ~1% compared to prior April guidance (the impact of Middle East disruptions was largely offset by other improvements) • Adjusted free cash flow conversion guidance was raised to the mid to high 40% range, up from the prior mid 40% outlook, driven by stronger than expected first half cash performance. This marks the third consecutive quarterly increase to full year guidance, bringing it closer to the company's 50% through-cycle target • Effective tax rate is expected to be in the low to mid 20% range • Management expects second half 2026 margins to be significantly higher than the first half, though the magnitude of improvement is slightly reduced from prior expectations due to ongoing Middle East conflict

• Ongoing geopolitical conflict in the Middle East has caused sustained activity disruptions, project deferrals, elevated logistics and freight costs, and near-term uncertainty; the financial impact of the conflict is expected to increase through the full year 2026 and will not fall to zero until a permanent regional resolution is reached • Recent flare-ups in Middle East tensions have reintroduced uncertainty to the regional recovery timeline, which has been slower and more gradual than initially expected • The union strike in Norway has created headwinds that will continue to weigh on regional results in the third quarter 2026 • Activity levels in Mexico remain below prior expectations, with well deferrals and shifting customer spending priorities creating near-term revenue pressure, though collections have been consistent recently • The proposed redomestication to Delaware is still subject to shareholder approval and Irish High Court approval, with no guarantee of meeting required thresholds • The NCS Multistage acquisition is subject to regulatory approval and customary closing conditions, with no guarantee of closing on the expected timeline • The energy services industry faces cyclical demand volatility, and pockets of pricing pressure across some markets continue to create margin pressure

Q: How does Weatherford balance revenue growth versus margin growth as the industry enters a new upcycle, especially after walking away from the low-margin Saudi LSDK contract? / A: Management acknowledges that long-term growth requires top-line expansion, so the company is not opposed to revenue growth. However, it will walk away from contracts that do not meet required return thresholds. On the Saudi LSDK contract, the deal already delivered strategic value by expanding Weatherford's deep gas drilling capability over three years, so walking away at current low pricing is an acceptable choice. The company has a strong pipeline of higher-margin opportunities, which is reflected in resilient Q2 margins and projected Q3 margin growth.

Q: Is the financial impact of the Middle East conflict moderating in Q3 2026 after the first half impact came in at the expected $30-$50 million range, and what is the current regional outlook following recent flare-ups? / A: Management states that the financial impact is not increasing currently, which is a positive sign, and it appears to be moderating, though this remains subject to future geopolitical developments. The impact is unlikely to reach zero until a permanent resolution is achieved, and this persistent residual impact is baked into current guidance. Regional conditions are mixed: prior to the recent flare-up, activity was starting to recover across most of the region (including Bahrain, Qatar, Iraq, and Kuwait, where the heaviest disruptions occurred), but the recent escalation has reintroduced uncertainty.

Q: How should we frame the 2027 demand outlook given management's view of a structural multi-year demand cycle anchored in energy security? / A: Management buckets demand drivers into three categories: 1) Middle East customers are focused on business continuity, infrastructure hardening, and eventual restoration and expansion of production, which will drive future activity uptake; 2) non-Middle East exporting countries are positioning themselves as stable suppliers and are planning cautious offshore expansion, reinforcing the projected multi-year offshore upcycle; 3) net oil/gas importing countries are increasing domestic production investment to improve energy security, driving growth in regions like Southeast Asia and India. Management did not provide formal 2027 guidance, but stated 2027 should be a year of growth for Weatherford, with more specific guidance coming in the next few months.

Q: What is the opportunity size and timeline for Weatherford's operations in Venezuela, where management expects tangible contributions in 2027? / A: Development of Venezuelan opportunities has progressed much faster than expected earlier this year, with growing interest from multiple international and local customers. Weatherford already has assets and workforce in place, with core product lines including artificial lift, intervention, and well services (the company's key strengths) expected to lead activity growth. At its peak, Venezuela represented ~$500 million in annual revenue for Weatherford, and management does not expect a return to that level in the next few years. The business will build non-linearly from a small base, with more specific details to come with 2027 guidance.

Q: Will the long-term free cash flow conversion target change after raising guidance to mid-to-high 40%, approaching the 50% through-cycle target? / A: The upward guidance revision reflects stronger than expected first half performance (first half conversion hit ~49%), driven by ongoing working capital improvement initiatives. Tax efficiency gains from the upcoming redomestication and the company's continued commitment to a capital-light 3-5% of revenue CapEx model will support further progress. Management remains focused on hitting the 50% target first, with the entire organization aligned to meet this goal. Only after consistently delivering 50% conversion will management consider raising the long-term target.