Nine Energy Service (NINE) Q4 2021 earnings summary

Executive summary

• 2021 revenue rose 12% to $349.4m as activity recovered; net loss narrowed to $64.6m from $378.9m, which included a large prior-year goodwill impairment.

• Market share reached ~22% of U.S. stages for a seventh consecutive year; Stinger dissolvable plug sales grew over 400% YoY.

• Liquidity ended 2021 at $64.7m, but $320.3m of 8.750% Senior Notes mature in October 2023 and refinancing remains a key challenge.

Financial highlights

• Revenue was $349.4m, up $38.6m or 12% YoY; cost of revenues rose 2% to $308.0m.

• Adjusted gross profit increased to $41.4m from $8.7m; GAAP operating loss was $50.0m versus $383.2m in 2020.

• Net loss was $64.6m, or $2.13/share, compared with $378.9m, or $12.74/share, in 2020.

• Adjusted EBITDA was $5.2m, improving $31.0m from an adjusted loss of $25.8m in 2020.

• Operating cash use was $40.4m; investing cash use was $11.9m, and financing provided $5.0m.

Outlook and guidance

• North American capital spending was expected to increase meaningfully in 2022; activity growth, net pricing gains, labor availability and supply-chain constraints will shape results.

• 2022 capital expenditure budget, excluding acquisitions, was $20m–$30m; spending depends on industry activity and discretionary growth initiatives.

• Net price increases were expected across many service lines, though labor and materials inflation and execution constraints could offset gains.

• Working capital was expected to use cash as activity rose; borrowing-base availability could recover with higher receivables and inventory.

• Forecast liquidity was expected to cover operating needs, debt service and planned capex for at least 12 months, contingent on improved performance and market conditions.