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01/11 08:25
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals several concerning factors: declining market activity, pricing pressures, and uncertainty in forward guidance. While some financial metrics show growth, the lack of guidance, tariff challenges, and potential revenue declines overshadow these positives. The Q&A section highlights management's inability to quantify pricing pressures and future oil prices, further increasing uncertainty. These factors suggest a negative sentiment, likely leading to a stock price decline of -2% to -8% over the next two weeks.
Revenue $150.5 million, an increase of approximately 6% quarter-over-quarter due to market share gains and cost reductions.
Adjusted EBITDA $16.5 million, an increase of approximately 17% quarter-over-quarter driven by increased activity and efficient operations.
Cementing Revenue $57.2 million, an increase of approximately 4% quarter-over-quarter due to an increase in jobs completed by approximately 11%.
Wireline Revenue $29.6 million, an increase of approximately 7% quarter-over-quarter due to more efficient operations and no holiday shutdowns.
Completion Tool Revenue $33.9 million, an increase of approximately 2% quarter-over-quarter due to market share gains in the Permian Basin.
Coiled Tubing Revenue $29.9 million, an increase of approximately 16% quarter-over-quarter due to significantly higher utilization.
General and Administrative Expense $13.3 million, no year-over-year change mentioned.
Depreciation and Amortization Expense $8.6 million, no year-over-year change mentioned.
Net Cash Used in Operating Activities $5.3 million, no year-over-year change mentioned.
CapEx Spend $4.3 million, with a full year CapEx budget unchanged at $15 million to $25 million.
Average Days Sales Outstanding (DSO) 57.6 days, no year-over-year change mentioned.
Completion Tools Revenue: Completion tool revenue for the quarter increased due to market share gains in the Permian Basin with our Plug offering.
Cementing Revenue: Cementing revenue for the quarter was $57.2 million, an increase of approximately 4%.
Wireline Revenue: U.S. Wireline division increased revenue by approximately 7% quarter-over-quarter.
Coiled Tubing Revenue: Coiled tubing revenue increased by approximately 16% this quarter.
Market Share Gains: We continue to execute our strategy of market share gains and cost reductions.
Natural Gas Outlook: We are optimistic on the long-term outlook for natural gas and the positive impacts it could have on Nine's earnings.
Pricing Pressure: In May, we began to see some activity declines as well as pricing pressure, specifically in the Permian Basin.
Operational Efficiency: We did not have the negative impacts of holidays, weather and budget exhaustion we saw in Q4, resulting in more efficient operations.
Increased Utilization: Utilization was significantly higher in Q1 versus Q4, driving an increase in both revenue and profitability quarter-over-quarter.
Board Appointment: The recent appointment of Joey Hall to the Board of Directors.
Refinancing of ABL: Closed on a new asset-based revolving credit facility with White Oak Commercial Finance due November 2027.
Economic Factors: The recent decline in oil prices, coupled with increased costs due to tariffs, has created uncertainty for the energy industry and global markets. The timing and totality of these impacts on customer plans and U.S. activity levels remain unclear.
Commodity Price Impact: Commodity prices will influence activity levels, with customers currently evaluating their plans. The recent OPEC announcement has led to falling oil prices, and the company is monitoring operator reactions.
Tariff Challenges: Tariffs are impacting Nine, particularly in the wireline division with perforating guns and coiled tubing reels. The company is engaging in pricing discussions with customers and exploring alternative material sources to mitigate cost increases.
Market Activity Decline: In May, there have been observed declines in activity and pricing pressure, especially in the Permian Basin, leading to uncertainty in forward-looking plans.
Revenue Projections: The company anticipates a decline in both revenue and adjusted EBITDA compared to Q1, projecting Q2 revenue between $138 million and $148 million.
Market Share Gains: Nine Energy Service continues to execute its strategy of market share gains and cost reductions, particularly within the cementing business.
Technology Development: The company emphasizes the development of its technology and maintaining service quality and execution at the well site.
Board Appointment: Joey Hall has been appointed to the Board of Directors, bringing industry expertise to enhance strategic decision-making.
Q2 Revenue Projection: Nine anticipates Q2 revenue to be between $138 million and $148 million, a decline compared to Q1.
Adjusted EBITDA Outlook: The company projects a decline in adjusted EBITDA compared to Q1 due to uncertainty in market conditions.
CapEx Budget: The full year CapEx budget remains unchanged at $15 million to $25 million.
ATM Program: During Q1, we did not sell any shares under the ATM program.
Excess Cash Flow Offer: As per the terms of the indenture governing 9 senior secured notes, the company is required to periodically offer to repurchase such notes with a portion of any excess cash flow. Nine did not generate any excess cash flow as defined in the indenture in the most recently ended two fiscal quarters. As a result, no excess cash flow offer will be made to noteholders this month.
The earnings call reveals a decline in revenue and EBITDA, driven by rig count reductions and pricing pressures. Market share losses, operational challenges, and liquidity constraints compound these issues. The Q&A session highlights complex market conditions without clear solutions. Despite international expansion efforts, the overall sentiment is negative due to disappointing financial results, competitive pressures, and lack of actionable guidance.
The earnings call revealed mixed results: strong international growth and increased market share in some segments, but overall revenue decline and lack of clear guidance for Q4. The Q&A highlighted management's cautious outlook due to market unpredictability, with some optimism for Q1. These factors suggest a neutral impact on the stock price, as positive developments are offset by uncertainties and a lack of strong guidance.
The earnings call reveals several concerning factors: declining market activity, pricing pressures, and uncertainty in forward guidance. While some financial metrics show growth, the lack of guidance, tariff challenges, and potential revenue declines overshadow these positives. The Q&A section highlights management's inability to quantify pricing pressures and future oil prices, further increasing uncertainty. These factors suggest a negative sentiment, likely leading to a stock price decline of -2% to -8% over the next two weeks.
The earnings call presents a mixed outlook. While there is a slight increase in Q4 revenue and stable cash flow, the company faces challenges such as a net loss, reduced EBITDA, and risks from natural gas price fluctuations. The optimistic guidance for future revenue growth in certain segments is tempered by uncertainties in margins and regulatory risks. The lack of margin guidance and potential tariff impacts add to the uncertainty. Given these factors, the stock price is likely to remain stable, resulting in a neutral sentiment.
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