Nine Energy Service (NINE) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue reached $138.2 million, up 4% sequentially and exceeding guidance, despite a 3% decline in average US rig count, driven by strong cementing performance and stable pricing across service lines.

• Adjusted EBITDA was $14.3 million, up 47% quarter-over-quarter, with incremental margins of 79%. Net loss for Q3 2024 was $10.1 million, a 28% sequential improvement.

• Cost reduction and supply chain initiatives positively impacted profitability, with ongoing efforts to sustain improvements.

• Cementing revenue grew 12% sequentially, offsetting declines in other service lines, and market share increased across all basins.

• Management remains optimistic about long-term natural gas market outlook despite current low prices and expects moderate activity pickup in 2025 if prices recover.

Financial highlights

• Cash and cash equivalents stood at $15.7 million, with total liquidity of $43.3 million as of September 30, 2024.

• Paid down $5 million on the ABL credit facility in Q3 and an additional $3 million in October; current borrowings at $47–$50 million.

• Sold 5.4 million shares under the ATM program YTD, generating $8.2 million in net proceeds; 1.2 million shares sold in Q3 for $1.4 million.

• Net cash used in operating activities was $5.9 million in Q3; Q3 CapEx was $3.6 million, with YTD CapEx at $11.7 million.

• Net debt as of September 30, 2024, was $334.3 million; total debt was $350 million.

Outlook and guidance

• Q4 2024 revenue expected between $132 million and $142 million, with anticipated declines in adjusted EBITDA and margin due to seasonality, budget exhaustion, and lower international tool sales.

• CapEx guidance for 2024 reduced to $10 million–$15 million from $15 million–$25 million.

• Moderate activity pickup anticipated in 2025 if natural gas prices recover to $3 or above, with the company well positioned for growth in key basins.