Nine Energy Service (NINE) Q4 2022 earnings summary

Executive summary

• FY22 revenue rose 70% YoY to $593.4M; Adjusted EBITDA increased to $93.7M from $5.2M, with Adjusted EBITDA margin rising from 1% to 16%.

• Growth reflected higher service activity, pricing and completion-tool volumes; estimated U.S. stage share increased to ~20% from ~18% in 2021.

• Priorities for 2023: generate free cash flow and delever, grow domestic and international tools, add scale, and advance ESG initiatives.

Financial highlights

• Revenue was $593.4M vs. $349.4M in 2021; adjusted gross profit was $136.3M vs. $41.4M.

• Operating income was $43.6M vs. an operating loss of $50.0M; net income was $14.4M vs. a net loss of $64.6M.

• Basic EPS was $0.47 and diluted EPS $0.45, compared with basic and diluted losses of $2.13 per share in 2021.

• Net cash from operating activities was $16.7M vs. cash used of $40.4M in 2021; year-end cash was $17.4M.

Outlook and guidance

• Activity growth is anticipated in 2023; U.S. E&P capital spending is expected to rise, but likely at a slower rate than in 2022.

• 2023 planned CapEx budget is $25M–$35M, excluding possible acquisitions; maintenance CapEx is expected at $20M–$30M.

• 2023 focus includes international tool expansion, domestic refrac opportunities, market-share gains, pricing, and continued wireline electrification.

• Free cash flow, if generated, is intended for deleveraging; liquidity was forecast to cover capital needs for at least 12 months, subject to operating performance and market conditions.