NINE - Earnings call transcript Q3 2024 | Nine Energy Service, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings, and welcome to the Q3 2024 Nine Energy Service Earnings Call. [Operator Instructions].

As a reminder, this conference call is being recorded. It is now my pleasure to introduce your host, Heather Schmidt, Vice President of Strategic Development and Investor Relations. Thank you.

begin. may You

Heather Schmidt

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

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

number These Forward-looking are of and subject statements a risks which actual control. our to many expectations. We cause materially beyond uncertainties, can review advise our differ listeners the and filings discussed from risks risk release current and uncertainties in of the to with to are results earnings factors our our SEC.

or any statements any revise update We publicly reason. undertake for obligation forward-looking no to

include Our financial non-GAAP comments measures. today also

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

I the call Ann to will now turn Fox. over

Ann Fox

million, We Thank and our generated Thank approximately of margins of $XXX XX%. discuss approximately negative you, EBITDA above Revenue million, range joining was $XXX the were EPS for results quarter for million everyone. of The for $X.XX. $XX.X XXXX. original of guidance quarter-over-quarter to an diluted which you adjusted of million. increase morning, EBITDA XX% Incremental adjusted third quarter to was our the today $XXX.X us Good Heather. --

price of led Northeast sustained declining spaces be with We in approximately challenging, QX. the levels the lower to prices We natural continues average and -- calendar. completion for X% gas Overall, the count gas just Low year was extremely the this land white U.S. QX. above by to natural Haynesville and through averaging -- as the activity stable in the market U.S. well delays rig relatively as quarter end $X from have

business, cementing by despite cementing increased quarter-over-quarter market count by X% decreasing. team rig by the where approximately quarter-over-quarter, jobs share driven within approximately Despite XX% XX% The our total approximately by grew revenue operate. our approximately quarter-over-quarter the X% we by completed this, mostly increased we revenue and areas

Our cementing they pricing sales reevaluating able team to share, market win our boosting versus to while deliberate efforts, market share balance a were adopted strategy and execute.

continue also which coupled service, continues advanced the to excellent and offer in We on-site us the most differentiate with and cement market. to delivery execution slurries,

in across and within by coil, for better Pricing service margins stable service conjunction approximately efforts lines XX%. quarter-over-quarter increase, and all this with However, supply adjusted the chain cementing EBITDA lines, remained of sales incremental tool international utilization revenue XX% relatively increased quarter with higher approximately

come has But have reduction very the well cost cost always of which are reductions as top material Revenue closely. offset quarter-over-quarter, and impact priority to levels we increase vendor our number Northeast international in through helped is the we consolidation for lower the completion Haynesville. our began and revenue including to across positively to a as operating costs. reduction rationalization remaining continue effort of strategies ongoing our reduce profitability. of tool starting our profitability. as a lines This will and watching some quarter-over-quarter, look We and specifically be activity and programs, Cost see supply largest organization, late but ways flat QX, structure, relatively service costs sustainable initiatives chain was a increased our in was an our within by in

our frac of extremely with the We hybrid Frac as as happy pincer well plug have our Dart. commercialization been

market and across We are basins. share are quickly pincer operators running largest in the U.S. our of some plug gaining with the

and minutes our bit less meaningfully per XX% reducing low for allows plug significant wear and as approximately has current product this composite X drill-out our a time eliminating customers, times plug in cases, reminder, some a bit material as trip. As than plug, for frac saving

pump-down guns to Scorpion operators chance the if operations allows the Dart do with plug not Frac The reinitiate setting. fire post

With a saving of and over out a usage revenue team to our water, down the wireline steady revenue ball operators hold eliminate money. market. remained this Despite can quarter, pump time, the the competitive frac to need coming continues flat very and of our Northeast, XX% dart, in

from utilization saturated this in have we very win with this Permian X% share Despite region, Basin, approximately our a to the by quarter. supplementing efficiency. market worked increasing increased with by Coiled maximize days this able X% due approximately tubing to competitive crews to better landscape the been Northeast work revenue in quarter

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

Guy Sirkes

Thank you, Ann.

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

we million XX, under $XX September had ABL At of credit borrowings the facility.

down ABL paid QX, we million, additional $X credit our October And borrowings approximately million. During XX, facility. paid making on our we million $XX an current $X on down

of in the also provide put QX, paid million. the company. for flexibility last place approximately payment of to we During a million our $XX we end year, $XX.X interest At ATM program

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

of total shares, we months approximately a XXXX, X which proceeds the XX, million. has September -- have generated net approximately ended of $X.X sold million For X.X and

recently notes indenture the governing to terms portion of cash required fiscal the the excess cash Nine offer any flow. not such ended X did repurchase any periodically per senior As excess in X indenture the defined secured with notes, is flow as a generate quarters. in to of most company the

month. excess flow to offer result, this a be will noteholders cash made As no

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

cementing jobs, increase increase third was XX%. revenue by $XX.X for an million, blended revenue quarter, the X%. approximately job completed approximately Cementing an X,XXX the average X%. we approximately During The of of increased per quarter

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

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

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

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

For operating days. for spend bringing $X.X average million. DSO for million. was the company of The in $X.X spend to million, total net used September cash XX QX third was activities XX.X through our quarter, the CapEx reported $XX.X QX

$XX full reminder, decreased million, a to As our of $XX down we XXXX from guidance million $XX original our million. to million CapEx to $XX range year

I will back now turn it to Ann.

Ann Fox

We very for as creating capacity commodity will of you, volatility demands part visibility from to as rise prices. in the long-term It time, demand a low Thank Guy. believe natural well gas AI power expands. dynamic and for as still the is LNG increase due large exports

gas moderate levels. conjunction commodity over we bring online. to customer levels. gas we above, supportive of It prices But is natural If assuming see early we provide XXXX back on operators levered anticipate XXXX activity current the budgets, activity or with resetting will average a in do specifics prices, believe activity in natural $X pickup too

We are well basins. very these in positioned

we natural respond are significantly and XX% quickly capitalize of positioned market. the revenue, our ready and XX% our Northeast seen this a well catalyst We have on gas growth around Haynesville and improving if and past account is earnings to still significant recover. to in for and an we The prices for believe

QX, of QX as are million. with be as revenue this, $XXX due we million tool expect to For to and moderate down and a weather compared Because anticipating well in with $XXX exhaustion, decrease we sales. international slowdown QX a projected budget between holidays

adjusted our also typically well. adjusted QX anticipate down in with activity and will seasonality be as that budget see We We exhaustion. versus EBITDA margin EBITDA QX declines weather, and

as and results see we similar environment do a an count repeatable rig However, results QX our anomaly. not in these as view

share this innovate measures differentiate the and service. increasing sticky declining I technology who and purposeful winning proud to was market market team a team implementing strategy, and and in sustainable market. executed within extremely am customers, our a through of cost-cutting continues with Our profitability

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

Operator

Instructions]. [Operator

First Capital is ATB from Waqar Markets. Syed of question

Waqar Syed

businesses? to what's leading gains these other Ann market share also but especially, in in cementing

Ann Fox

sat of won whole deliberate and we and think and kind we're we yielded the and specific very very very So and our where we great devised at together and down got and specific we with on very, the I metrics in our work. KPIs approach. the performance specific strategy results, were team and It this in looked a market, were customers

they Waqar,that up sticky customers we were gains very performances. for I while. team. feel the with solid you be pleased these see we very on some forever, can -- worked because share sure, never picked a hadn't also market And very but they won previous that I'm last

incredibly on team Also, there. with remedial after wireline, wireline in we've pleased differentiated customers really remedial So here. the some significant going

to awesome bringing really the business. differentiation wireline So

cost to chain. earlier as that very on was So as at that this of targeting that we and the just that well devise QX mostly significant you're in reduction supply this a execution strategy a targeted started year, looked we program seeing results

So et that and consolidation internally use, vendors, how product efficiencies we're vendors, repricing creating through of about can be thinking cetera.

simultaneously market share the on two-pronged revenue So structure. attacking and strategy, you also cost a attacking the saw then both side

we better like in repeatable of So QX. surprised this do see that you quarter the a is be if didn't and sustainable, coming out quarter would I this expect and box or

Waqar Syed

Great. Yes.

quarter. last your versus of X X of quarters terms in first compare how they But are year, this like Now sales, you they first the of up picked tracking? the when in international the year quarters

Ann Fox

Yes.

head -- to deliberate working we're be set Middle actually Waqar, to on next I'm think, and in a I also strategy expanding week, that to business. very East we're the

bit it's them lower are probably numbers, You'd that's but year, small these a frankly. -- this see just

law just it's than numbers think I so of more anything. small the And

the But to we about the be success based plan rate on the very if and there. surprised of again, come. that tool awards very to about regions incremental sit some of down run see excited of going success other and attack the recently. But we're had I you deliberate be our we've won't that tools

Waqar Syed

which the that is flow what you free at what then lowering now given would rate at with And our can for had cash costs, and positive? success you've least still be is then the Okay. EBITDA you say run breakeven --

Ann Fox

Yes.

or they And that. pretty obviously, say if the for I million know as cash as you team, that a and I'll up rig but number, ground know, come a count environment. -- take, call depressed entire give sitting moves, . is if pounding obviously, quarter cash Waqar, team, is this you flow, the around a a $XX were you all, to want this if we're around with you're sitting So hit would think neutral they you here, what

do you if pick refresh activity very, So on achievable. very even year, see up just that I based incremental think, next budget

We cuts, have to the we're cost which excited come more on about.

expect we efficiencies So increased there.

-- So at here. we're just the start we're

Waqar Syed

these now like are Would base these activity Or let's But pick sticky where if raise have Okay. activity up. costs cost to some your back? come picks don't assume does up? of you

Ann Fox

Yes, great a question. that's

fundamentally the we have think I margin revenue. incremental dollar improved on that

these that sticky forward. would are you'll see say I So going cuts cost very

Waqar Syed

would activity perspective, what would Haynesville to between well? side, actually on to Okay. they hear year, a gas what customers, and next rig could as pick then seen And bit natural activity count what side? especially down on lead like do if up differentiate is pick you see both recently. when between, quite a and need come the from and of Appalachia view then hard,; what completion the And the little your from you up Appalachia rig the drilling We've

Ann Fox

It's with see. obviously, EIAs it, a Sure. front funny because, gas the we projecting which like handle price X on the of a to

believers long-term in I Microsoft somebody in need reinforces have those you like natural gas as from And centers. for and on our customers are demand. think huge to our data power Board, who us know, medium- we also the the us

up in very looks over with next very, Northeast. XX power the years, comfortable all the we're specifically the curve demand what So like

all of it. to on with think front love X the I see would we a something

takes complicated the of and temperatures bit pressures Haynesville the a technical Waqar, Probably very a a completion. higher are little really price, extreme and because It's there.

of you need little a probably higher price So bit there. a

cost. with not Northeast We and are extraordinarily trying to operators I just as that them like service create the new any Dart in too, and the pincer just on incremental sector in them the Frac are say a issues efficient. giving and the save technologies, up efficiencies that well alleviate help provide also potential will the

service the that sector. So more to there's come going efficiencies be from

think, of again, answered we I a hope believe I lot your question. So that if spurs activity. could there, X that we really see just a

Waqar Syed

luck. much, thank best It of very you and does. Well,

Operator

next Daniel John The Energy Partners. question from from is Daniel

John Daniel

guess. relief your in it's your curious, "Hey, a the but during " has quality think view if the with more value But just very who need a time office? hand, price to say, the dicey, went just these out We I'm work keep service QX been said, bit term more . do crews, question, customers best the think they they I value you of theoretical there? who got you to give. what's Like something's let's see the do market they'd Or you? hat frame here, and you of just

Ann Fox

we what so reduce in to per stay market -- say, that of really make to increases we I And we mean cost providing material, to not a the cost where view our of the to the the we're one at as need . Street tell how with at have do think is a that hero. efficient you the price is them need as price foot. team I see a take focused. opportunity get I to always of Yes. obviously, we're you do for pincer a ton crude where It's our teammates wobbling the more -- $XX lateral customer take like, a cost, reduce lower completing they're the is asking

on into is acreage, And as capital their our are Street the lesser efficiency well. costs move know, you they inflating. relentless as naturally As being customers'

side better. to job our and back here on then offices to also to and in is how get R&D So do this the out the and creative figure faster cheaper

John Daniel

might your to million, Fair X work? some for no [indiscernible] at throw it I enough. got you've know to assets sense but in too it $XX going Or is get, which off that All go is come you. that formal right. more I'm to early? QX I back guidance

Ann Fox

my sense. XXXX. to is that's in there here I going sense some that Yes, uplift be

Operator

to This the like for turn President over CEO, floor concludes and the question-and-answer comments. session. back would Ann Fox, I closing to

Ann Fox

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

Operator

This concludes today's teleconference.

at this for participation. You may disconnect lines time. you Thank your your

Nine Energy Service (NINE) 1 Nov 242024 Q3 Earnings call transcript