NINE - Earnings call transcript Q1 2024 | Nine Energy Service, Inc.

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Operator

Greetings, and welcome to Nine Energy Service First Quarter 2024 Earnings Conference Call. [Operator Instructions]

I would now like to turn the conference over to your host, Heather Schmidt, Vice President of Strategic Development and Investor Relations.

Heather Schmidt

Thank you. Good morning, everyone, and welcome to the Nine Energy Service earnings conference call to discuss our results for the first quarter of 2024. Ann Chief and Financial are and Executive today Sirkes, Guy Officer. me Fox, Chief President Officer; With We appreciate your participation.

Some of views reflecting forward-looking include our comments about today future may statements events.

uncertainties, to revise These control. our and from uncertainties results of are our beyond actual release or filings risks a statements reason. cause differ statements which are review to subject risks Forward-looking risk and to the many can current listeners no of forward-looking and our obligation We number materially publicly our undertake update earnings to the any for with discussed advise SEC. We in factors any expectations.

Our comments measures. include today non-GAAP financial also

release Relations a and website. financial also our details and measures section Additional found are press in can the in of to comparable be the our Investor most directly included GAAP quarter reconciliation first

will Ann. over now call turn I to the

Ann Fox

range guidance earnings million, Thank Good was Revenue We $XX million discuss adjusted results first $XXX Heather. EBITDA quarter generated morning, you, was original negative of to of million. Thank million for an was quarter everyone. to $X.XX. today joining of our the upper share $XXX XX%. EBITDA the per $XXX.X XXXX. us for you adjusted margin Diluted for within reflecting our of which

Haynesville. revenue by and XX% anticipated. to with we the Demand remained better the utilization growth also relatively remaining tubing stable, QX, a supplement was Permian, able the days was work During mostly and increased approximately region personnel to for markets rig rig our were within this in quarter-over-quarter flat adjusted revenue, strong which by quarter-over-quarter. EBITDA flat we work increased XX%, the count Coiled reflected work where from the U.S. average equipment coiled Despite relatively driving count, in over flat to due sending coming in tubing. coiled quarter-over-quarter. our This were quarter-over-quarter, tubing of

scaled milestone am XXXX. relatively in dissolvable flat since the a the of and quarter-over-quarter. of units QX, proud sold the they introduced bullish our We in U.S. way We of major on the on dissolvable we I XX,XXX but continued compromising Stinger extremely and market reliability. the and quality reached plugs QX capability adoption product revenue Completion of was not technology, to team the dissolvable abroad. remain this surpassing in technology our only without

Northeast the focus wireline. In this impact market within we wireline, excellent in within began on of remedial to cementing pressure In the while maintained environment. see rig additional our QX, exposure to continue business market Permian market gaining pricing and we we share and and count balance to conventional share as in share profitability increasing the

like to over information. to financial now would I the detailed to walk call Guy turn through

Guy Sirkes

Thank you, Ann.

availability facility, million As $XX.X $XX.X of million million of XX, March credit of March in $XX XXXX. XXXX, cash $XX.X of million At were ABL the and a ABL the as with March liquidity borrowings we total resulting revolving equivalents XX, cash had Nine's under credit under facility. position of XX,

$X down had QX, our paid during ABL. a we payment $XX.X interest notes on million reminder, for a million and the As

Additionally, we quarter. for of had the $X.X CapEx million

cash As balance trough, as begun back our build already a March XX our we cash and result, was have out of to of balance.

January interest balance and cash with these payments outflows and were and cash of flow to All our are anticipated, August. that our conjunction will continue in in ebb made

in put flexibility ATM the $XX to a year, program the place for million we last At of end provide company.

to not did sold ATM program QX, not any and sell have under During shares any date. the we

cash portion notes any terms As to of per our governing of excess offer flow. indenture the to such with senior secured notes, we the periodically required are a repurchase

any indenture the X in the flow most fiscal in did recently excess ended cash We defined quarters. generate not as

reconciliation be is of will offer earnings flow cash available our excess release. month. in no A result, this to calculation this a As made QX noteholders

the During profit gross totaled $XX.X million. adjusted revenue $XXX.X with of million first quarter,

decrease revenue The a jobs, of quarter, was cementing first the of approximately XXX $XX.X approximately X%. X%. Cementing for completed X%. average decrease the job quarter approximately blended we million, During a decreased revenue by per

quarter, we completed wireline first of Wireline XX%. flat by increase quarter decreased per blended an approximately revenue to average the million, approximately which During X,XXX was stages, compared XX%. for the revenue stage QX. $XX.X The was

stages, tools, was Completion XX,XXX revenue of tool approximately of million, decrease we increase $XX.X completion a completed X%. approximately For an X%.

XX% with worked XX%. an days revenue tubing approximately the million, decreasing coiled our was increase day XX%. XX%, quarter, tubing $XX.X first of approximately approximately of and blended average with increased the by During by Coiled rate utilization

reported quarter, provision non-U.S. During tax quarter, million. was the of amortization tax company for XXXX a for million approximately as expense our and provision state and Depreciation million. the the $XX.X $X.X of tax first The $X.X result jurisdictions. company's expense the position general administrative and and was

was million. reported $X.X company CapEx $X.X DSO XX.X in QX The net for activities cash average spend used for operating million. days. The of

unchanged but $XX is to guide is $XX CapEx XXXX flexible a million, at dictate conditions market if Our million reduction.

will turn I it Ann. to back now

Ann Fox

stable, a activity Thank supportive you, price. by Guy. were driven levels mostly oil QX

gas we in gas completions, continuing with declines specifically Haynesville some However, starting and in basins, in and calendar, overall space prices Eagle saw further into the below February including white slowdowns are and decline, QX. delayed the the activity this impact in Northeast Ford. Because in natural declines anticipating levered $X the we rig natural more of in

Nine's to market. Northeastern within in basins able was to decline out for we a people Haynesville. reminder, recover. are ensure It outlook to approximately long-term as these capitalize prices view We revenue XXXX, gas of remain and XX% a this temporary gas pause generated when or slowdown and gas-related medium- the imperative is of activity we the natural As in footprint on maintain our positive and the

impacts short-term have will our this However, margins. negative on

markets the and are dictated as very markets adjust closely We by the and we'll course outlook. watching

for versus flat into coming in the oil second areas markets this mostly of potential There public supportive with commodity XXXX year. XXXX additional prices remain lever remained activity the Permian capital rigs companies in have like oil the in and basins. half The stable majority if the could be of keeping programs

our operations Permian units and Northeast with our coiled supplemented specifically have within Haynesville and locations, personnel from We wireline. tubing and

anticipate we business. as the of pressure with QX, in revenue $XXX as quarter white cementing to well of $XXX between QX, gas-levered and within full our compared activity space we pricing million. expect basins with For this, realizations Because down declines within be QX projected million

levels. EBITDA and adjusted anticipate margin will from We our decrease QX also that adjusted EBITDA

have We our quickly business shifts market our capitalize nimble. on to and ability shown is

geographic tools on diversity provides and line international of focused our and are more we the service diversifying Our markets. revenue top good us to completion in balance, streams

business excellent with unchanged. is an of asset-light with forward-leaning strategy Our coupled technology, providing service

open We will up now Q&A. the call for

Operator

first Instructions] Syed Waqar Our comes [Operator question Markets. Capital ATB from with

Waqar Syed

sales any the in there? anything outlook business, from So that are substantial international or you your revenue assuming

Ann Fox

always a projection that We revenue. have of

we've Just X% as lumpy, between to it's a as is reminder, roughly and international revenue an the before. annual X% very on market told basis

continue So sales anticipate in international we would to having QX.

Waqar Syed

Okay. And in seen to negatively? has then, business positively Or your consolidation Ann, going impact E&P do impacted we've the or forward? recent that that you the industry, foresee that

Ann Fox

question, consolidation. great Waqar. a We see definitely continued It's

that, Exxon we negative has not we're so pleased analyze for far, with example. Pioneer, with And when impact. and a this us, business both very been For

publics, anything, could I So programs think their right they to as to and seen impact. if budgets. see not D&C start out negative And now, tend you we've with consistency we some a put large know,

us. can and, streamlines And so process that frankly, the help

So we've any to answer negatives. specifically, your question no, seen not

Waqar Syed

issue And specific the broad now? cementing, of all is in right it it the Okay. basin on basins? side is kind pricing Or in very

Ann Fox

it's has is not the -- Haynesville in count it's into are. basins. clearly, right broad more prices the gas environment where been pressure would to States coming across say well, overall the No, I United felt pricing relative That Yes. given just wonderful now. rig But

Waqar Syed

gas seeing spot pressure in basis? some particular come you see off pricing? rigs Okay. market stability in as you the Are do more in that maybe Or more the

Ann Fox

The could, gas Waqar. basins

that pricing I just think you'll quarter get full we've QX. a It's realization that of though, that in impact. taken

that seeing we're that. that downward now, we experience on stabilized, did So but a has not right slope

Waqar Syed

you let's E&Ps, into any your about or side the activity half And seeing then of with the discussions year? in terms picking on oil or privates year this into first, visibility say, later are next second up publics

Ann Fox

to firm our customers I programs. X this would in a moment year. going have rig oil be have actually that in year. We don't surprised the if do or of pretty up some flat I they're been the think Northeast our programs the are their large, most put in and publics that later by steadfast publics maintain they But at

could change. could builds nice folks that well. nice obviously, to seeing in start always We're a So so we it ducts build duct -- as really XXXX, here, very know, to are Haynesville be the as going

creates all operators start you for as So if pricing. at tremendous that velocity know, once, the

for time into exciting an So . it could be coming 'XX us

Waqar Syed

them become available any picking personnel from any the And are new you side, more seeing of up Okay. or activity being privates -- E&P the private the formed hints in industry? as consolidation from

Ann Fox

No. say the day. No, is we the more theme Waqar. I of consolidation aren't, would

Operator

next is with Our EF from question Hutton. Tim Moore

Timothy Moore

and two for that. sentiment was public Ann and about and my private. answering questions asked Operator are thanks Guy, just of

You quick about and the June on mentioned think cementing we I'm lead on quarter. out softness to when times fast continue later just in there's they I back increasing late Or to the can that I count, talked bounce seem mean know summer? -- trying to job or on visibility? based an volumes too not is the I maybe necessarily that thinking unreasonable cementing upswing. could be start that would pricing maybe September

Ann Fox

No.

I think Tim. that's reasonable,

Timothy Moore

on downturns always quite mid-September, I you especially I mean, bounced lapped has the eventually, rig and good. Very just mean, side. oil stable back. been since count they the

you from it'll volume inevitable, cementing. going on to So bottom not not side on the put but you're out, it work away like far that I'm seems it like seems the be

Ann Fox

feels. Yes. That's how it

Timothy Moore

is to how what some And maybe the switching customer of it? frac just hybrid And the are responses Good. doing? Pincer gears, plug

Ann Fox

having response. a we're Well, great

with then commercialized We and middle right some are of in now customers. customers other testing the field also

material, it you as a of much little plug better some materials, has hybrid, is composite dissolvable times. bit offers and that customers it drill-out our know, So

love how the the composite, market they composite and for it with that the perceive side. really we're to that's trying a dependability really that it's so And answer and as on reliability innovate customer and

it's It's plugs the is So answer market, run an answer today of really still an in preponderance plug. large after the composite not the which dissolvable replace go U.S. to that very to

that. And so asking. you pleased very with we're still for Thank

Timothy Moore

think going of sold can't years to you've I it's it's it's incremental. of really not how because many great. to going I that's be from I said, like wait couple now cannibalize, good. you very hear to mean a those No, thousands

I some done So to that's demos lot, couple good untapped pilots of opportunity it's get international And of sales, focus on on maybe think any just expansion. for be a X% you the really this only good you. I year? you know Can but quarter. asked of last and where give think maybe you've and such might design following I color this a X% know rest countries last asked I you there. a up quarters the the some of the countries maybe where

Ann Fox

Sure.

know, region as our East So be countries, sell XX but as well as you into about sales in the will majority Middle of the we Argentina.

Middle the And you think mostly so as Saudi. as when the East, UAE about you're well talking about

Timothy Moore

it capacity to And you to could like as capacity the to and mean satisfy them. in you up come hard it seems able like full you're how working you're be add do for probably mean, extra I handle there. Are -- I guess Great. orders country demand I

Ann Fox

Yes.

not have far. thus that with had problem We a

chain. we do I a of So that supply good think job managing really

so far, that's So, bottleneck. a been not

Timothy Moore

Great. Great.

lower out quick expenditure mean, to $XX other to or decide year if your CapEx you be point of know will this things year? that I in probably this million, wait $X September, would the you summer What then end $XX how quarter. million the maybe October? of I capital range, X high budget million towards spent shake reiterated this almost Just end you questions. first and you guidance the you might more finish see the

Ann Fox

Right.

great a it's question. So

winter don't season, to reason, anticipated So market coming turn we've the make range. pricing see And some in summer, this million guided then for we into obviously, million, with adjustments. loaded we'd $XX gas any $XX if the a back-end

just So flexibility that. purposely to we've do planned

prices waiting think is what gas all those So we're like. I fall like, look what where is to gas the weather shape see production out and do

to with ready changes. those as here you we're we're always flexible And So make CapEx. very know,

Operator

with Partners. from is John Daniel question Daniel Energy next Our

John Daniel

just the Heather, Ann, of quarter just refrac several years? you up E&P over see had the the We I'm one talk on next And And this companies team, few is opportunity set opportunities me. it... how for market. curious that

Ann Fox

Well, John, a That's question. thank you. great

routinely. of part make I public about see think of and you've it started talk this to our their companies some program. actually

has very the U.S. So companies changed in our forecast solution. of that offers technology business a We're few actually refrac here this the into now. lot. We one

for is really we're wonderful niche continue a market see this excited So to grow. and us, it to

of looking growth year. We've growth experienced lot more We're last year. certainly a forward this to

very cleaner barrels. at it So market. certainly are production obviously these They capacity, from are also aware promising we're looking a that

all way we're ton So a of refracs the making sense, around, with results seeing thus are these technology. wonderful our refrac far and

Operator

the -- end have reached We ahead, go Ann.

Ann Fox

thank just and E&P wanted was to all our so and investors. saying we much. employees I partners Thank our you

Operator

This concludes conference. today's

You may your lines your for disconnect thank and time, at we this you participation.

Nine Energy Service (NINE) 7 May 242024 Q1 Earnings call transcript