NINE - Earnings call transcript Q2 2024 | Nine Energy Service, Inc.

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Operator

Greetings, and welcome to Nine Energy Service Second Quarter 2024 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded.

I will now turn it over to Heather Schmidt.

Heather Schmidt

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

future Some of not our reflecting forward-looking include events. our comments and today views may statements of

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

Our comments measures. financial include non-GAAP today also not

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

will the I turn now over to Anne. call

Ann Fox

you our $XXX Revenue million us quarter our EPS Thank generated everyone. diluted joining which was to of today you, original XXXX. of EBITDA adjusted $X.XX. for We for and of results within guidance discuss Thank $XXX to for $XXX.X negative quarter million, million morning, Good million. was Heather. $X.X the second

This rate come market. following year we decline a the XXXX. coming end continued earnings. of is market, almost both out we rig over which rigs additional of the of seen XX the the an off rigs out resulting to QX, XXXX, a market, over see since end our already depressed During come Since of XXX in which in and declines impacted had revenue XXX we have

closely pricing revenues count, land of our service for which lines. market very drives spot a and U.S. earnings and business, rig are our all volume the As with correlated

our in lower rig of as cementing business space lines, pricing margins. as our counts, full which In lower across impacted addition increased we most white service negatively realizations well had of quarter also to

decrease especially the in both activity this been was Ford by declines, service Eagle anticipated, line has and quarter impacted and down significantly in revenue due This Haynesville slightly rig Cementing pricing. a to basins. As continued the

historically revenue rapidly and this quarter to have international single sold tool of it service Completion was seen a tools We a recover the reduction as quickly this as our in down activity to with decrease most is lines. due related digits U.S. of market, business differentiated sales. X well and land

quarter refrac tools be continue but Growing continues strategy, will to part business. an our revenue We our our business be lumpy important to of medium- U.S. to in international our a strong quarter-over-quarter. international had long-term

for one We refrac over and largest dissolvable the to have holders well. continue established This providers. important for XXX very jobs our moving will market niche the be forward. an date of Both refrac X run ourselves plugs to have and as acreage some perform in top composite of U.S. the

are We extend. well of the as the lateral more to operators seeing running continue toe dissolvables, in lengths especially

service. X. is adoption yet of in revenue forward. Our well the operate, activity team maintained has XX% the getting the customers market due complex ESG This means dissolvables programs bigger wireline revenue coiled our for in as mostly more execution through in was we in historically which quality difficult sustained of our completions tubing activity Wireline to continues through standards. team superior line bigger for which and Haynesville, well is service and supportive accounted moving most the and which levels Northeast, competitive often over down as to revenue low site Core the flat consolidation, and whitespace declines higher are differentiate Despite for U.S. quarter-over-quarter.

operations. to able typically traditional storage with more specialized and which is revenue, wireline Additionally, pump-down down than remedial has revenue been team pump our supplement gas

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

Guy Sirkes

Thank you, Ann.

in of Nine's of liquidity ABL revolving provide ABL million XXXX, of million additional facility, ATM ABL and in As end were XX, credit the the availability July million $XX facility. we the million XX, position resulting a $XX.X of year, equivalents cash of $X At the XXXX. for June company. $XX June with credit under place On company borrowings under an last put the XX, facility. total June million of had we At a credit the borrowed program as under XX, to million XXXX, cash $XX $XX.X flexibility

During generated X.X sold program, $X.X shares million net the approximately we which under ATM QX, of proceeds. approximately million

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

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

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

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

by During Coiled the worked was XX%, decrease utilization a tubing approximately of approximately quarter, tubing of decreased coiled average the some blended $XX.X XX%. with our million, by day XX%, approximately XX%. days second rate with increase revenue

total million. million to net $XX.X tax QX June provided for reported operating approximately state is million. and expense through The CapEx the average XXXX The cash The company million. XX tax jurisdictions. company's activities $X.X spend our company spend DSO expense for $X.X by was During $X.X amortization of QX XX.X reported $X.X in days. bringing the year-to-date. administrative of is second position The non-U.S. tax million, and for provision and was $XX.X quarter, Depreciation general million. result was provision the of our

our to until with normalized Les. million to returns XXXX CapEx $XX preserve range $XX liquidity market million, original from conjunction guidance and decreased market million year and down our full declines to have to to We million, the $XX $XX of more

interest and our and continue balance payments. paid ebb Our QX, next million will semiannual $XX.X approximately cash during to interest payment our with of be will flow

back Ann. turn will it to I now

Ann Fox

QX Natural space The calendar. around Guy. to continue linger rig rig far overall led count has gas thus to of the be pricing you, completions, prices compared $XXX between delayed activity flat in to QX and relatively we levels $X, projected which stable. are $XXX is with million relatively Because in this, more million. revenue declines mostly and and Thank with expect flat white QX

be predict We the outlook positive EBITDA market. that and extremely to for remain and will prices, adjusted medium- margin is we gas adjusted also anticipate our on EBITDA long-term well. difficult flat but It the as commodity relatively

projected the For the first time is U.S. to in power demand in increase. years, many

the close X% over approximately estimating preceding decades over to domestic Some versus demand XX next power that X grow are could the years. by XX%

for Nine's XX% is if is and we price of the still recovers. approximately market exposure to gas this significant XX% catalyst believe a natural gas growth to revenue,

We before have markets basins. maintained weathered have a and very difficult and lines team strong service across

prepared model to capitalizing believe we the technology with our offerings. service experienced differentiated are and allows us growing business quickly on markets and and market shift asset-light Our in we are in

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

Operator

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

Waqar Syed

lines the And are positively that doing? you're refracs service what impacted by being

Ann Fox

refracs? first being the part. part question, . say the by impacted positively is first didn't the I Could of hear which you

Waqar Syed

. What service lines positively Yes. being impacted are

Ann Fox

car. That's you, a Thank great question.

division, cementing our of completion we wireline tubing from So tools and offer division, a actually services our full coiled division. our suite

with So -- this Very, partnership there. a and very refrac provide holistic very so we're all solution providing of very those that about services we excited in market. our NuGen excited can about

this year. In today, market. folks current a that the of and we of fact, callers next that handful could there's share market the market significant only very in should participating anticipate this growth think And realize own we we the really lion's

So pretty us to feel exciting especially growing backdrop. commodity so strongly market, this about price in for a

Waqar Syed

QX as areas QX versus But some the gap? well. important and And confidence refrac to be you flat are Great. in why rig up flattish relatively even Appalachia, look you is on profitability? Or it the could that relatively where of . to when the profitability then and Permian, see this rig the we relatively and revenues so Nine Okay. lower that you QX in that's count, average, QX. fitting mentioned especially in count revenues, appears versus at is your business they

Ann Fox

Yes.

question, exactly. course, Waqar. of it's I a mean challenging, of predict is great this So to another lot

We are and we July quarter had to the with stronger did than anticipated. in the come start very pleased

also which Of is of refracs. course, really the seeing closing some up assets a able gas remedial helping West space of into very we're to business. cementing It's gaps our of really bit is successfully. and have also us closing into the pushed that markets of in of some coiled move some in as really natural -- work good white being well. traction storage. lots and inside calendar, tubing that little Texas

certainly July So volatile these outlooks again, indicator. very is good a but predict in market, a such to hard

remaining So we are hopeful here.

Waqar Syed

would where And indications QX then early any Great. be? of Okay. for CapEx

Guy Sirkes

Waqar, it's Guy.

we've So the year. guided for just

quarters. between haven't So given we the split exact on guidance the

Waqar Syed

then Okay. . And

Ann Fox

I want been is that to better. really challenging company in my And Chief there, to just these make thing markets learn efficient Officer together Rikard, do Operating One I thing and more we leaner is is on we're really getting doing we've add and do X is the and he have and try things since maintaining an some leaner more and this our how And we're developed refurbs excellent CapEx just equipment. although and think in XXXX lowered, efficient system. really equipment range I unique in-house with

used you'll see be. CapEx return, anywhere So to to I should it market think come the what don't close

So pleased that. with very very,

So efficiency these term. are incremental to the long . of the the for just improvements business

Waqar Syed

that And on in, the guidance any -- in see you for great. Do anything completion sales? to impact for how have international -- built then know. Really you do in QX? good tools, and side That's international your

Ann Fox

lumpy. International going into And it's be again, that guidance. sales baked is to

say, multi-cycle that, probably people, We we for less work are with pleased work. not with we would really we were If valve. guessing 'XX, barrier have more this

pleased as percentage know, markets very still those challenging how we're with go, a small again, very and that. that. So when especially to we're Waqar lumpy of very predict But you

. So but trajectory with -- the pleased

Waqar Syed

tubing And businesses? Good. your coil for overall that and has then Okay. cementing wireline stabilized these pricing, all now

Ann Fox

on do mean commodity it's seen yes, . I pressures prices. that. That in think like won't But now happens stability We it's fair with we've stable. there incremental to very be doesn't feel say depending what

Operator

comes Energy. next John from Daniel question Our Daniel with

John Daniel

When you we Bakken? estimate XXX percent what a to ballpark the and are run look in can jobs those . the give at Eagle Ford date, of refrac

Ann Fox

vast that you've got you've and majority but -- majority, sites just not lot in acreage because So haven't and the the got was vast X Eagle a Ford and acreage, of those the reclaimed. well XXX%, Tier understimulated. been the Bakken

there So are refracs. we're seeing economics the really these some from just wonderful results and good,

to so far, in West So question your starting -- answer Texas. overwhelming are we but specifically, majority

how see goes. So we'll that .

John Daniel

that many How that I given could be spreads to take basins, makes the it how hopefully eventually at look markets. have do mean, all we educate sense aspect And in that? a you is done how other there the you Like is you any done here operators and expertise? created other if Okay. not who consulting the have do might

Ann Fox

-- certainly number I a lot is of really it's book, and could our massive of for customers our Yes. seeing we're be a different as as No, that there there launched them mean -- customers. out us and to well approach There's refrac refrac we a because have sent angles. learnings we've from

are we not certainly involved, personnel These but you could. are actually folks involved quite as jobs. yes, easy are technical. extremely the It's only technologies not So know, wonderful, The very, the talented.

the very think hard so analytics roughly frac X% just X% say could that us. I are of be it's to And market a estimating it's been about we And development for I -- today. market. to There's the think of some that yes, mean size certainly,

-- the it's growing that thing I us fully most for a market. we that is think is this see important

about . So excited that. we're very

John Daniel

hearing bit back not of for Okay. private I we're of your closing ramp E&Ps others -- next want My of have to companies going there more more there's but just But late feels when to like each realistic like to facilities could question, activity. a challenged X,XXX-foot you. probably like from think to sounds a least. call and it there's if quarter next when public at like pretty they dialing or few the My markets, softball, might wreck that it be do paint quickly could on thoughts by service, I'm meant half how where markets gas we and activity. both train come to but as feels various now -- in right think seems a and a a a more about And you I start 'XX, between and it now, the exposure back just quarters a on it it kind it's ramp wanting Ann, to be quickly then, question. we is gas across what next ramp it's a in in. of of year curious scenario then rush But more bit

Ann Fox

'XX. EBITDA regards you in don't Well, you that rebound see back cut frankly, preserve for QX and It's the can Yes. you, you flexibility into a look just company no out. of of like you QX the always back and a So right? at important. half capture and it's And the if you 'XX, of to capability, slash in have question. team to have tempting versus can this company those markets at if mirror view always dissimilar John, back easy That's bring thank the to anyone, you way this We do XXXX, earnings. the that from of It's then that. and actually in clearly look burn the

massive And done believe in and outlook actually so in to people's did think or But power our We this, we demand answer a a we before, this do on and not that is United have that's source are to the for natural States. this -- coming that's long-term facilities because we to might positions. medium Well, different we gas, going have if supply we to the ways do the hang where we change entirely. be

we're, and to beginning I think this is as here. So country, realize pending that it's a

markets. be obviously will the service very the Haynesville of few wreck. that that be think Northeast we'll the good we has very We we personnel, could a service close think excellent providers retained in equipment, our one So to And to Northeast and train be it ready and customers we're both the there.

does the XXXX, customers velocity competitive the we just seen where it landscape our then dealing when excellent, of remember they if moves of are pricing as than us for prices that gas earnings an for have And you entirely and we and And with the rebounded. as gas velocity So rebound, before. both were Permian. is different price this all well

could up prices think firmly is remain are, only I say these can we thing markets they move where stay just they move they the flat. right won't So don't but down, gas could

very to confident the need for as to. I'm actually in I'm half for hopeful long So tremendously our back team's ability of we year. next girgle also as

were You've at pretty seen types markets. how surviving we've reduced these CapEx. We good of

of lot there. So confidence a

Operator

have question-and-answer to the end the comments. would to the We session. for I reached Fox like Ann turn of over now call closing back

Ann Fox

participation employees, your investors. really and of Thank our course, for you you. to our call the today. . thank want partners Thank E&P I in our

Operator

This today's SPX conference. concludes

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

Nine Energy Service (NINE) 6 Aug 242024 Q2 Earnings call transcript