Nine Energy's Q3 2025: Contradictions Emerge on International Sales, Service Sector Relief, and Tariff Pricing Strategies

Date of Call: October 31, 2025

Financials Results

• Revenue: $132M for Q3 2025, below prior guidance of $135M–$145M; revenue down sequentially across divisions (cementing $49.3M, down ~6%; wireline $28.2M, down ~15%; completion tools $31.2M, down ~16%; coiled tubing $23.4M, down ~7%)

Guidance:

• Q4 revenue expected between $122M and $132M; both revenue and adjusted EBITDA expected to be down versus Q3.
• Do not expect significant activity changes in Q4; anticipate typical seasonality (weather, holidays, budget exhaustion) and continued low pricing.
• Full-year CapEx budget unchanged at $15M–$25M and likely to come in at the lower end of the range.
• Expect international revenue to increase year-over-year (first 9 months +19% driven by UAE, Argentina, Australia).

Business Commentary:

• Challenging Market Conditions:
• Nine Energy Service reported revenue of $132 million for Q3, below its guidance range of $135 million to $145 million.

• The decline was driven by a significant decrease in the U.S. rig count, from 592 to 549, accompanied by pricing pressure due to unsolicited bids and customer consolidation.

• Division-Specific Performance Decline:

• The company experienced a 6% decline in cementing revenue to $49.3 million and a 15% drop in wireline revenue to $28.2 million.

• These losses were attributed to decreased activity and pricing pressure, particularly in the Permian region.

• International Revenue Growth:

• Nine Energy Service saw a 19% increase in international revenue for the first nine months of 2025 compared to the same period in 2024.

• Growth was driven by increased sales in countries like the UAE, Argentina, and Australia, contributing to the company's overall revenue amid domestic market challenges.

• Technical and Operational Accomplishments:

• The cementing division achieved a significant milestone by completing a complex cementing job in the Haynesville basin, despite challenging operating conditions.

• This accomplishment was due to the development and implementation of a latex-based cement slurry, showcasing the company's commitment to innovation and execution.

• Cost Management and Financial Position:

• The company's total liquidity position was $40.3 million as of September 30, 2025, with cash and cash equivalents of $14.4 million.
• Despite these figures, potential reductions in the borrowing base due to inventory appraisal impacts may lower liquidity in the coming months.

Sentiment Analysis:

Overall Tone: Negative

• "Q3 was a challenging quarter" with "significant pricing pressure" and revenue "below the range of our original guidance." Management: "we anticipate both revenue and adjusted EBITDA will be down compared to Q3."

Q&A:

• Question from John Daniel (Daniel Energy Partners, LLC): When will customers recognize that relief is needed in the service market and when will they listen given current pain and likely flat activity next year?
  Response: Management: We're close to that point — seeing frac availability issues (Northeast) and underinvestment; however, operators face flat CapEx and cost pressures, so meaningful relief is challenging and timing is uncertain.

• Question from John Daniel (Daniel Energy Partners, LLC): Could the rollout of larger coiled tubing (e.g., 2 7/8) create a step change in equipment needs for long laterals, or is that a unique opportunity?
  Response: Management: Technically a step change is warranted for longer laterals, but capital constraints across the service sector make broad adoption uncertain; operators continue to run long laterals.

Contradiction Point 1

International Sales Growth Expectations

It involves differing perspectives on the growth trajectory of international sales, which impacts investor expectations and strategic planning.

When will customers realize that current strategies are ineffective and take action? - John Daniel (Daniel Energy Partners, LLC)

2025Q3: We are certainly flirting with that point now. We're starting to hear about frac availability problems in the Northeast due to underinvestment. - Ann Fox(CEO)

Could you compare international sales growth for H2 2024 versus H1 2024, and first half 2025 versus second half 2024? - Waqar Mustafa Syed (ATB Capital Markets Inc., Research Division)

2025Q2: So we had a 20% increase first half over second half -- first half over first half last year. And I do think this is -- as we've said many times to the market, it's a lumpy market. It's very hard to predict. - Ann G. Fox(CEO)

Contradiction Point 2

Customer Activity Visibility

It involves differing statements about the visibility into customer activity, which affects operational planning and financial projections.

When will customers recognize the need for relief as current approaches become ineffective? - John Daniel (Daniel Energy Partners, LLC)

2025Q3: We're starting to hear about frac availability problems in the Northeast due to underinvestment. - Ann Fox(CEO)

Do you have visibility into customers' Q4 plans? - Waqar Mustafa Syed (ATB Capital Markets Inc., Research Division)

2025Q2: We don't have visibility into Q4 and so far as major changes up or down. I would say we have had customer conversations indicating increased activity in Q1, and that is standard with budget refresh. - Ann G. Fox(CEO)

Contradiction Point 3

Relief for Service Sector

It involves differing perspectives on the likelihood and timing of relief for the oilfield services (OFS) sector, which directly impacts the financial health and strategic planning of the company.

At what point will customers realize they need to adjust their approach and begin listening? - John Daniel(Daniel Energy Partners, LLC)

2025Q3: We are certainly flirting with that point now. We're starting to hear about frac availability problems in the Northeast due to underinvestment. However, operators are thinking flat CapEx next year, and they're under pressure as well, moving into Tier 2 acreage. The situation is complicated, and relief may be challenging for both service and upstream sectors. - Ann Fox(CEO, Director)

Which business line is most affected by pricing pressures, and by how much? - Waqar Syed(ATB Capital Markets)

2025Q1: I hope I would say it's positive, but yeah, there's a lot of activity in the Permian, so there's a lot of demand there. It's just this pricing pressure is, I guess, widespread for the service sector, which we -- which you know, we're hearing from folks that we work with in the industry. But the demand is there. The activity is there. - Ann Fox(CEO)

Contradiction Point 4

Tariff Impact on Pricing

It pertains to the company's ability to pass on tariff-related costs to customers, which directly affects profitability and cost management.

At what point will customers recognize the need for relief and take action? - John Daniel(Daniel Energy Partners, LLC)

2025Q3: We are certainly flirting with that point now. We're starting to hear about frac availability problems in the Northeast due to underinvestment. However, operators are thinking flat CapEx next year, and they're under pressure as well, moving into Tier 2 acreage. The situation is complicated, and relief may be challenging for both service and upstream sectors. - Ann Fox(CEO, Director)

Can you pass tariff-related costs to customers? - Waqar Syed(ATB Capital Markets)

2025Q1: We really haven't wanted to say that we're raising pricing as much as really having a conversation with the customer. And we are very open and transparent about the tariffs, and the customer understands the need to pass it through. Whether we're able to do it 100% or not, I think, time and negotiations will tell on that. - Ann Fox(CEO)

Contradiction Point 5

International Completion Tool Sales

It involves the strategic direction and execution related to international completion tool sales, which impact revenue growth and market penetration in global markets.

When will the Texas completion tools facility expansion be completed, and what capacity is expected after expansion? - Matthew Wiilliams (Piper Sandler)

2025Q3: We believe our international sales momentum will continue to build as we successfully complete our facility expansion in Texas to meet international requirements and start to work our way through our backlog. - Ann Fox(CEO)

Any international completion tool sales in Q1? - Waqar Syed(ATB Capital Markets)

2025Q1: We are hitting some headwinds. We did a lot of work in Q4 on setting up the supply chain for tools that are different than our U.S. tools. And so we had some challenges with timing and things like that. - Ann Fox(CEO)