Nine Energy Service Q3 2024 Earnings Report

Nine Energy Service (NYSE:NINE) reported higher-than-expected revenue for Q3 2024. CEO Ann Fox announced a revenue of $138.2 million, which surpassed the guidance range and marked a 47% increase in adjusted EBITDA from the previous quarter. Despite a negative diluted EPS of $0.26, the company experienced growth in its cementing business and coiled tubing revenue. However, Nine Energy expects a decline in revenue for Q4 2024 due to seasonal factors and budget exhaustion while maintaining a focus on cost reduction and market share gains.

Key Takeaways

• Revenue in Q3 2024 was $138.2 million, exceeding the guidance of $127 million to $137 million.
• Adjusted EBITDA rose to $14.3 million, a 47% increase from the previous quarter.
• Negative diluted EPS of $0.26 was reported.
• Cementing business saw a 12% revenue increase and a 23% market share gain.
• Coiled tubing revenue grew by 5% due to better utilization.
• Full-year CapEx guidance was reduced to $10 million to $15 million.

Company Outlook

• Anticipation for Q4 2024 revenue decline to $132 million to $142 million.
• Focus on cost reduction and market share gains despite seasonal challenges.
• CEO Ann Fox expressed optimism for 2025, expecting a pick-up in activity if natural gas prices rise above $3.

Market Highlights

Bearish Highlights

• A 3% decline in the average rig count in the US land market.
• Low natural gas prices, averaging just above $2, impacted activity in the Haynesville and Northeast.
• International tool sales were up, but overall activity in some regions remained low.

Bullish Highlights

• Strategic focus on market share and effective pricing led to significant gains in the cementing sector.
• Significant cost reduction program targeting supply chain efficiencies implemented.
• Anticipated positive cash flow run rate of approximately $15 million per quarter.

Misses

• Despite revenue growth, diluted EPS remained negative at $0.26.

Q&A Highlights

• Ann Fox discussed the company’s strategic approach, market expansion efforts, and anticipated operational improvements.
• The company is also focusing on international expansion, particularly in the Middle East.
• Key technological advancements like the pincer hybrid frac plug are gaining traction.

Nine Energy Service showed resilience in a challenging market in Q3 2024, demonstrating strategic growth despite low natural gas prices affecting activity levels. The focus remains on profitability improvements in anticipation of market recovery.