 Second Quarter Results Total revenues of 8.7 million, a 78 year-over-year decrease Net loss of 8.8 million and loss per diluted share of 0.19 Adjusted EBITDA of 7.9 million 31.3 million in cash on hand and 21.4 million of total debt as of June 30, 2020 Net cash provided by operating activities and free cash flow of 20.1 million and 19.5 million, respectively, for the six months ended June 30, 2020HOUSTON, Aug. 10, 2020 GLOBE NEWSWIRE -- NCS Multistage Holdings, Inc. NASDAQ: NCSM the Company, NCS, we or us, a leading provider of highly engineered products and support services that facilitate the optimization of oil and natural gas well completions and field development strategies, today announced its results for the quarter ended June 30, 2020.Financial ReviewTotal revenues were 8.7 million for the quarter ended June 30, 2020, which was a decrease of 78 compared to the second quarter of 2019. This decrease reflected reductions in product sales and services volumes in North America as well as lower pricing for certain products and services, including composite plugs and tracer diagnostics, partially offset by higher services revenue in international markets. We believe the decrease in both activity and pricing resulting from the decline in market conditions primarily related to the Coronavirus disease 2019 COVID-19 pandemic had a negative impact on our revenues during the three months ended June 30, 2020 as drilling rig and completion activity in North America began to decline sharply through the month of March and continued to decline during the second quarter of 2020. In addition, customer activity in China was delayed and activity in Argentina was suspended from mid-March through June due to government regulations. Total revenues decreased by 84 as compared to the first quarter of 2020 with decreases in both product sales and services in the United States, Canada and outside of North America.Gross profit, which we define as total revenues less total cost of sales exclusive of depreciation and amortization, was 2.3 million, or 27 of total revenues, in the second quarter of 2020, compared to 16.7 million, or 42 of total revenues, in the second quarter of 2019. Cost of sales as a percentage of total revenues increased due to the significant reduction in revenue, leading to under-utilization of manufacturing capacity and field service personnel, as well as a reduction in pricing for certain products and services.Selling, general and administrative SGA expenses totaled 15.5 million, a decrease of 7.4 million in the second quarter of 2020 as compared to the second quarter of the prior year. This overall decrease in expense reflects declines in compensation and bonuses, share-based compensation, ERP-related expenses, and bad debt expense. Additionally, professional fees, including litigation fees, were lower this quarter by 2.5 million as compared to the second quarter of 2019. These favorable variances were partially offset by severance charges incurred for the three months ended June 30, 2020 related to reductions in workforce, which was higher this quarter by 3.4 million as compared to the second quarter of 2019.Net loss was 8.8 million, or 0.19 per diluted share, for the quarter ended June 30, 2020, which included a net impact of 0.2 million after tax effect of 0.5 million, or 0.01 per diluted share related to realized and unrealized foreign currency losses as well as a benefit of 1.1 million related to a reduction in foreign tax expense. As with the first quarter of 2020, income tax was impacted by the Coronavirus Aid, Relief, and Economic Security Act CARES Act and income tax valuation allowances recorded to reduce the carrying value of deferred tax assets. Adjusted net loss, which excludes these items, was 9.3 million, or 0.20 per diluted share, for the quarter ended June 30, 2020. This compares to a net loss of 22.3 million, or 0.48 per diluted share, in the second quarter of 2019, which included a net impact of 8.2 million after tax effect of 17.1 million, or 0.37 per diluted share related to an impairment charge and realized and unrealized foreign currency gains and losses. The income tax adjustment was significantly affected by the income tax valuation allowance recorded to reduce the carrying value of our U.S. deferred tax asset and the tax effect of a non-deductible goodwill impairment. Adjusted net loss, which excludes these items, was 5.2 million, or 0.11 per diluted share, for the quarter ended June 30, 2019.Adjusted EBITDA was 7.9 million for the quarter ended June 30, 2020, a decrease of 6.9 million as compared to the second quarter of 2019.Capital Expenditures and LiquidityThe Company incurred capital expenditures of 0.6 million, net, for the six months ended June 30, 2020 and 4.1 million, net, for the six months ended June 30, 2019.As of June 30, 2020, the Company had 31.3 million in cash and 21.4 million in total debt. During the second quarter of 2020, the Company increased its cash position by 15.8 million and its total debt by 3.7 million. Our net working capital, which we define as our current assets, excluding cash and cash equivalents, minus our current liabilities, excluding current maturities of long-term debt, was 48.6 million at June 30, 2020.On August 6, 2020, we entered into Amendment No. 1 the Amendment to our senior secured credit facility that i reduced the U.S. Commitments from 50.0 million to 25.0 million and ii reduced the Canadian Commitments from 25.0 million to 0. NCS Multistage Inc., our Canadian Borrower, may make borrowings under the U.S. Facility, subject to a 15.0 million sublimit. The Amendment also limits total outstanding credit exposure of the lenders under the U.S. Facility and the Canadian Facility to a borrowing base calculated based on eligible receivables. There were no changes to the maturity date which remains at May 1, 2023.The Amendment i eliminated financial covenants requiring compliance with maximum leverage, minimum interest coverage and minimum asset coverage tests, ii added new financial covenants requiring compliance with minimum liquidity and, in certain circumstances of reduced liquidity, minimum fixed charge coverage tests during any reduced liquidity period and iii added new covenants, including a weekly sweep of available cash over a specified threshold, more stringent limits on capital expenditures and enhanced financial reporting requirements.Cost Reduction and Liquidity Enhancement InitiativesIn response to the current market conditions and reduction in demand for our products and services, including as a result of the COVID-19 pandemic, NCS has undertaken, and the Board of Directors is monitoring and evaluating, multiple initiatives to reduce our cost structure, limit capital expenditures and enhance our liquidity and access to capital, including: Reductions in force which have reduced our headcount in the U.S. and Canada by approximately 190 people, the implementation of furloughs for certain employees in field operations and engineering roles and reductions to salaries and hourly rates for substantially all remaining employees, including reductions in salaries for executives averaging 20. These actions are expected to result in approximately 20 million in annualized cost savings, with approximately 70 of that amount associated with SGA expenses; A reduction in bonus accruals for 2020 and the decision to not pay out 2019 bonuses; An elimination of the employer matching contributions for NCSs U.S. 401k plan and its Registered Retirement Savings Plan in Canada; A moratorium on non-essential travel for all employees; Negotiation of new rates, work rules and payment schedules with vendors; Strategies to reduce third-party spend, including information technology, financial services and third-party research and development; Deferral of U.S. employer payroll taxes, as permitted under the CARES Act; Application for, and receipt of, benefits under the Canada Emergency Wage Subsidy CEWS program; Accelerating the filing of our 2019 U.S. federal tax return to utilize net operating loss carryback provisions from the CARES Act in order to obtain a cash tax refund during the second half of 2020; Reducing planned capital expenditures for the year and selling excess vehicles; Relocating our U.S. assembly operations to better align with our supply chain partners, reduce overhead and improve fixed cost absorption; Borrowing an additional 5.0 million under our senior secured credit facility in March 2020 to fund severance costs associated with the reductions in force while maintaining operational liquidity; In April 2020, Repeat Precision entered into a new promissory note providing up to 5.0 million in additional borrowing capacity; and Amending our revolving credit facility to modify certain covenants and to establish a borrowing base related to our accounts receivable, which we believe provides us with enhanced financial flexibility.In connection with the reductions in workforce described above, we recorded severance charges of approximately 1.3 million in the first quarter of 2020 and 3.5 million of severance expense in the second quarter of 2020, which is reflected in the condensed consolidated statements of operations under SGA expenses. NCS expects to record 0.9 million of severance expense to be reflected in the condensed consolidated statements of operations under SGA expenses in the third quarter of 2020.NCS continues to evaluate market conditions and will continue to take necessary actions to further reduce our cost base and try to enhance liquidity should there be a further reduction in the demand for our products and services. 