Nine Energy Service, Inc. (NINE) Q1 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reveals a mixed sentiment. The company faced significant Q1 challenges, including weather impacts and financial constraints, leading to weak results. However, management's optimistic guidance for Q2, driven by improved weather conditions and operational efficiencies, provides some positive outlook. The Q&A session highlights potential growth from DUC completions and refracs, but uncertainties remain around pricing strategies and cash flow normalization. Overall, the sentiment is neutral, reflecting both challenges and optimistic future prospects.
Key Financial Performance
Revenue $130 million for Q1 2026, a decrease compared to Q4 2025 due to severe weather impacts causing operational inefficiencies and delays.
Adjusted EBITDA $3 million for Q1 2026, negatively impacted by a $5.5 million noncash inventory write-down.
Cash and Cash Equivalents $11.2 million as of March 31, 2026, with a total liquidity position of $46.9 million.
Borrowings $90.4 million under the revolving credit facility as of March 31, 2026, with an additional $5 million borrowed on April 28, 2026.
Adjusted Gross Profit $13.8 million for Q1 2026.
Cementing Revenue $53.4 million for Q1 2026, an increase of approximately 1% compared to Q4 2025, despite a 2% decrease in average blended revenue per job.
Wireline Revenue $23.9 million for Q1 2026, a decrease of approximately 5% compared to Q4 2025, due to a 4% decrease in wireline stages and a 1% decrease in average blended revenue per stage.
Completion Tools Revenue $25.8 million for Q1 2026, a decrease of approximately 10% compared to Q4 2025, due to a 10% decrease in stages and minimal international disruptions.
Coiled Tubing Revenue $26.9 million for Q1 2026, an increase of approximately 4% compared to Q4 2025, despite an 18% decrease in average blended day rate.
General and Administrative Expense $17.7 million for Q1 2026.
Depreciation and Amortization Expense $8.2 million for Q1 2026.
Net Cash Used in Operating Activities $12.4 million for Q1 2026.
CapEx Spend $5.6 million for Q1 2026.
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Operating Highlights
Scorpion plugs: Surpassed 500,000 units sold, highlighting quality and sustained demand. Updated versions of Scorpion plug and dissolvable Stinger plugs, along with new tools, are planned to enhance the portfolio.
Wireline facility expansion: Opened a new wireline facility in the Haynesville Basin to capitalize on sustained natural gas-driven activity in the region.
International tools business: Achieved 14% sequential growth in revenue, driven by sales in the UAE, Argentina, and Saudi Arabia. Despite geopolitical risks, the Middle East remains a critical growth area.
Operational disruptions: Severe weather in January and February caused inefficiencies, delays, and revenue impacts, particularly in the Northeast and Permian regions. Operations normalized in March.
Cementing jobs: Completed 1,022 jobs in Q1, a 4% increase from Q4 2025, with revenue of $53.4 million.
Coiled tubing: Days worked increased by 28%, with revenue rising to $26.9 million, a 4% increase.
Post-bankruptcy transformation: Emerged from Chapter 11 bankruptcy and implemented fresh start accounting, resulting in a stronger financial position.
Focus on U.S. shale production: Strategy emphasizes being a premier completions provider in the U.S., leveraging the critical role of U.S. shale for energy security and reliability.
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Risk or Challenges
Customer and Vendor Disruption: During the transition from Chapter 11 bankruptcy and implementation of fresh start accounting, the company experienced some customer and vendor disruption. Although no material losses were reported, this posed a risk to operations during the quarter.
Inventory Write-Down: A $5.5 million noncash inventory write-down negatively impacted net income and adjusted EBITDA for the quarter, affecting financial performance.
Severe Weather Impacts: Severe weather in January and February caused operational inefficiencies, frac delays, and white space in the calendar, particularly affecting the Wireline division in the Northeast region and operations in the Permian.
Natural Gas Price Volatility: Natural gas prices, which were constructive early in the quarter, trended down significantly, trading below $3. This volatility could impact activity levels and revenue in gas-levered basins.
Geopolitical Risks: The Iranian conflict posed potential risks to the international tools business, although minimal impact was reported in Q1. The situation is being closely monitored for future disruptions.
Revenue Declines in Key Segments: Wireline and completion tools experienced significant revenue declines in Q1, with completion tools also impacted by minimal international disruptions.
Financial Liquidity: The company reported net cash used in operating activities of $12.4 million in Q1, with a total liquidity position of $46.9 million as of March 31, 2026. This highlights potential financial constraints.
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Guidance & Outlook
Normalized Quarterly Run Rate: The company expects improved and more normalized quarterly run rate beginning in the second quarter and continuing through the remainder of 2026.
Revenue and Adjusted EBITDA Projections for Q2 2026: The company projects second quarter revenue in the range of $136 million to $146 million and adjusted EBITDA of $10 million to $15 million.
Capital Expenditures (CapEx) for 2026: The company anticipates full-year CapEx to range between $20 million to $30 million.
Cash Interest Expense for 2026: Annual cash interest expense is expected to be approximately $7 million.
Completion Activity Outlook: Early indications suggest that completion activity could increase, particularly through the drawdown of DUCs (drilled but uncompleted wells), with potential incremental rigs being added. However, the timing and magnitude of these increases remain uncertain.
International Tools Business Growth: The company continues to see strong long-term opportunities in its international tools business, despite potential short-term disruptions in the Middle East due to geopolitical factors.
Operational Positioning for Incremental Activity: The company is operationally well-positioned for any incremental activity across U.S. basins and maintains a balanced portfolio across commodities.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:What is driving the stronger sequential improvement in Q2 guidance?
A:The improvement is primarily due to the lack of severe seasonality and operating inefficiencies seen in Q1. Incremental activity from operators like Conoco and Diamondback is expected in the back half of the year, but not reflected in Q2 numbers.
Q:Are DUC completions and refracs expected to come sooner?
A:Yes, there are better indications that DUC completions and refracs could be coming sooner.
Q:What caused the weakness in Q1 results, particularly in wireline and tools?
A:The weakness was due to catastrophic weather impacts, including the Ohio River freezing and record days below freezing, which were abnormal even for January.
Q:How much of the higher CapEx is for catch-up investments versus growth investments?
A:A significant portion of the higher CapEx is for catch-up investments, but there are also plans for both organic and inorganic growth opportunities.
Q:How well is the company positioned to generate cash moving forward?
A:In normalized years, the company expects to generate cash flow. However, Q1 and the bankruptcy process created significant noise, but cash flow generation is expected in 2027 and beyond.
Q:What is the level of inquiries and activity from operators in recent weeks compared to a few months ago?
A:The level of inquiries and activity has picked up considerably in the past two weeks, whereas two months ago, there was little to no activity. Operators are now considering DUCs and incremental rig additions.
Q:How is the company approaching pricing strategy for the back half of the year?
A:The company plans to increase prices across the board due to wage inflation and rising costs of goods.
Q:Is there an appetite for small tuck-in deals or larger transformational deals?
A:The company is open to small tuck-in deals but is primarily looking for more transformational opportunities.
Q:What operational efficiencies are expected to drive improvements in Q2 and beyond?
A:Improvements are expected from better weather conditions, reduced labor cost drag, and a shift in focus from survival to thriving, with careful growth strategies and increased operational efficiencies across service lines.
Q:Are there any lingering impacts from the steps taken during the busy quarter, such as legal fees or write-downs?
A:No, the company does not expect lingering impacts. Customers and vendors are intact, and any cleanups will be legitimate add-backs. The messy Q1 quarter is not expected to recur.
Q:How is the company balancing current operations with downhole innovations?
A:The company has bifurcated its engineering team into sustaining engineering and R&D, with a focus on building state-of-the-art R&D and test facilities. Differentiated tools and new innovations are expected to be deployed starting this summer.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the magnitude of pricing strategy changes and the exact timeline for cash flow normalization beyond 2027.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Arabia decline
Argentina Saudi
Basin rig
CEO Secretary
Cementing tubing
Chapter start
Completion activity
Development Investor
Director Heather
Heather engineering
Heather information
Income tax
Interim Chief
Nine addition
Nine customer
Relations Nine
Scorpion plug
application start
chapter Nine
conflict
customer vendor
disruption
inventory write
job increase
period
predecessor
reporting
stage decrease
start accounting
successor
weather impact
wireline
NINE Transcript
Nine Energy Service, Inc. (NINE) Q1 2026 Earnings Call Transcript
Unknown5-14
The earnings call reveals a mixed sentiment. The company faced significant Q1 challenges, including weather impacts and financial constraints, leading to weak results. However, management's optimistic guidance for Q2, driven by improved weather conditions and operational efficiencies, provides some positive outlook. The Q&A session highlights potential growth from DUC completions and refracs, but uncertainties remain around pricing strategies and cash flow normalization. Overall, the sentiment is neutral, reflecting both challenges and optimistic future prospects.
Nine Energy Service, Inc. (NINE) Q3 2025 Earnings Call Transcript
Unknown10-31
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.
Nine Energy Service, Inc. (NINE) Q2 2025 Earnings Call Transcript
Unknown8-6
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.
Nine Energy Service, Inc. (NINE) Q1 2025 Earnings Conference Call Transcript
Unknown5-10
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.
NINE Report
Frequently Asked Questions
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