Nine Energy Service (NINE) 6 Aug 24 2024 Q2 Earnings call transcript

In the recent earnings call for the second quarter of 2024, Nine Energy Service shared insights into their financial performance and strategic outlook. The call was led by Heather Schmidt, with Ann Fox and Guy Sirkes providing detailed updates on the company's financials and operational developments.

Financial Performance and Challenges

Nine Energy Service reported a revenue of $132.4 million in the second quarter, within their original guidance range. This was driven by a combination of factors, including rig declines and lower pricing in certain service lines. Notably, the company's adjusted EBITDA stood at $9.7 million, while diluted EPS was negative $0.40. Despite these challenges, the management expressed optimism for the medium- and long-term outlook, emphasizing the importance of their asset-light business model and strategic focus on operational efficiency.

Strategic Priorities and Growth Opportunities

The call highlighted the company's strategic focus on refracs and its growing role in this niche market. With over 300 refrac jobs completed to date, Nine Energy Service has established itself as a top provider in the U.S., particularly in the Eagle Ford and Bakken basins. This growth trajectory is expected to continue, as the company anticipates increased demand for refracs and the expansion of its service offerings.

Market Outlook and Competitive Landscape

The call also addressed concerns regarding the current market conditions and commodity prices. Despite the challenges, Nine Energy Service remains optimistic about the medium- and long-term outlook for natural gas, particularly in relation to growing power demand in the U.S. The company's focus on operational efficiency and strategic investments in technologies and services is expected to position it well for future growth, even in a volatile market.

Investor Relations and Financial Flexibility

The call provided an update on the company's financial position, including its cash and cash equivalents, borrowings under the revolving ABL credit facility, and the implementation of a $30 million ATM program. These measures reflect Nine Energy Service's ongoing efforts to maintain financial flexibility and navigate the current market challenges.

Q&A Session and Shareholder Engagement

The Q&A session provided valuable insights into investor concerns and the company's strategic priorities. Key topics included the impact of refracs on various service lines, the company's expectations for Q3 revenue and profitability, and the potential for international sales growth. The management's responses underscored the company's strategic focus, operational agility, and commitment to delivering value to its stakeholders.

Conclusion

Overall, Nine Energy Service's second quarter 2024 earnings call presented a comprehensive overview of the company's financial performance, strategic priorities, and operational developments. Despite the current market challenges, the management's optimism and strategic focus on refracs and operational efficiency position the company well for future growth. As the company navigates the volatile market conditions, investors and stakeholders will be closely watching its progress in the refrac market and its ability to capitalize on the anticipated growth in the natural gas market.