Nine Energy Service Announces Fourth Quarter and Full Year 2024 Results
-- Increased Q4 revenue 2% quarter over quarter, despite the average Q4 US
rig count remaining flat
-- Full year 2024 revenue, net loss and adjusted EBITDAA of $554.1 million,
$(41.1) million and $53.2 million, respectively
-- Revenue, net loss and adjusted EBITDA of $141.4 million, $(8.8) million
and $14.1 million, respectively, for the fourth quarter of 2024
-- Increased Q4 cementing revenue by 7% and Q4 completion tool revenue by
6% quarter over quarter, despite flat average US rig count
-- Total liquidity as of December 31, 2024 of $52.1 million
HOUSTON--(BUSINESS WIRE)--March 05, 2025--
Nine Energy Service, Inc. ("Nine" or the "Company") $(NINE)$ reported fourth quarter 2024 revenues of $141.4 million, net loss of $(8.8) million, or $(0.22) per diluted share and $(0.22) per basic share, and adjusted EBITDA of $14.1 million. The Company had provided original fourth quarter 2024 revenue guidance between $132.0 and $142.0 million, with actual results coming in the upper end of the provided range.
"We had a good Q4 with revenue increasing sequentially, despite a flat average US rig count and typical Q4 seasonality," said Ann Fox, President and Chief Executive Officer, Nine Energy Service.
"The Nine team had many accomplishments in 2024, despite a challenging backdrop for the oilfield service sector. Over the past several years, we have seen significant US rig declines, driven mostly by a depressed natural gas price, which averaged around $2.19 for 2024. Nine's earnings have historically moved in tandem with the US rig count, which will continue to be a significant driver for Nine moving forward. However, in 2024 we created and implemented a two-pronged strategy of market share gains and cost reductions enabling us to drive profitability in a declining rig count environment. We began to see the impacts of this strategy in Q3, which continued into Q4 with sequential revenue increases despite a flat average US rig count and typical Q4 seasonality impacts."
"Our cementing team was the largest driver of revenue and profitability growth, increasing quarterly cementing revenue by approximately 20% from Q2 to Q4, despite the 2024 US rig count reaching a trough in Q4. We exited 2024 with a Q4 cementing market share within the regions we operate of approximately 19%, an increase of approximately 14% over our Q4 2023 market share. Our completion tools team continued a relentless focus on technology in 2024, fielding multiple new technologies like the Pincer Hybrid Frac Plug and our new frac dart element. We remain bullish on the dissolvable plug thesis, especially as lateral lengths continue to expand. Technology innovation will continue to be a key focus in 2025 with the introduction of a new, state-of-the-art R&D and completion tools testing facility."
"Safe operations are essential and drive operational excellence, sustain morale, and create cohesion in the team from the field to the corporate office. This year, our Total Recordable Incident Rate ("TRIR") declined approximately 22% from 2023 to a 0.49, and the severity of our incidents also dropped. We launched our first Sustainability Report in 2024 which includes tough-to-get measurements for a corporation of our size."
"It is a very dynamic time, but we are optimistic looking into 2025 as we continue to execute our strategy, expanding on our market share gains and cost cutting initiatives we began implementing in 2024. We believe the long-term demand for natural gas will increase. Our revenue is over 30% levered to natural gas basins, and activity increases within these basins would have positive impacts on Nine's revenue and profitability."
"With what we know today, we expect 2025 US activity levels to be mostly stable. Despite weather impacts in January and relatively flat activity levels thus far in Q1, we anticipate both revenue and profitability to increase sequentially in Q1 compared to Q4 as we sustain and build-on our market share gains and cost cutting initiatives."
"We are constantly challenging ourselves to find ways to drive profitability for Nine. Our team is experienced and motivated. We are focused on continuing to execute our strategy and increasing profitability, and I am looking forward to seeing what we can accomplish in 2025."
Operating Results
For the year ended December 31, 2024, the Company reported revenues of $554.1 million, net loss of $(41.1) million, or $(1.11) per diluted share and $(1.11) per basic share, and adjusted EBITDA of $53.2 million. For the full year 2024, the Company reported gross profit of $61.1 million and adjusted gross profit(B) of $97.4 million. For the year ended December 31, 2024, the Company generated ROIC of (14.9)% and adjusted ROIC(C) of 3.7%.
During the fourth quarter of 2024, the Company reported revenues of $141.4 million, gross profit of $16.5 million and adjusted gross profit of $26.2 million. During the fourth quarter, the Company generated ROIC of (13.3)% and adjusted ROIC of 6.0%.
During the fourth quarter of 2024, the Company reported general and administrative ("G&A") expense of $14.2 million. For the year ended December 31, 2024, the Company reported G&A expense of $51.3 million. Depreciation and amortization expense ("D&A") in the fourth quarter of 2024 was $8.8 million. For the year ended December 31, 2024, the Company reported D&A expense of $36.8 million.
The Company's tax provision was approximately $0.2 million year to date. The provision for 2024 is the result of the Company's tax position in state and non-U.S. tax jurisdictions.
Liquidity and Capital Expenditures
For the year ended December 31, 2024, the Company reported net cash provided by operating activities of $13.2 million. For the year ended December 31, 2024, the Company reported total capital expenditures of approximately $14.6 million, which was within management's original full year 2024 guidance of $10 to $15 million.
As of December 31, 2024, Nine's cash and cash equivalents were $27.9 million, and the Company had $24.2 million of availability under the revolving credit facility, resulting in a total liquidity position of $52.1 million as of December 31, 2024. On December 31, 2024, the Company had $47.0 million of borrowings under the revolving credit facility.
On November 6, 2023, the Company entered into an Equity Distribution Agreement. During the three months ended December 31, 2024, no shares were sold under the Equity Distribution Agreement. During the year ended December 31, 2024, approximately 5.4 million shares were sold under the Equity Distribution Agreement, which generated net proceeds of $8.2 million.
$(ABC.AU)$ See end of press release for definitions of these non-GAAP measures. These measures are intended to provide additional information only and should not be considered as alternatives to, or more meaningful than, net income (loss), gross profit or any other measure determined in accordance with GAAP. Certain items excluded from these measures are significant components in understanding and assessing a company's financial performance, such as a company's cost of capital and tax structure, as well as the historic costs of depreciable assets. Our computation of these measures may not be comparable to other similarly titled measures of other companies.
Conference Call Information
The call is scheduled for Thursday, March 6, 2025, at 9:00 am Central Time. Participants may join the live conference call by dialing U.S. (Toll Free): (877) 524-8416 or International: (412) 902-1028 and asking for the "Nine Energy Service Earnings Call". Participants are encouraged to dial into the conference call ten to fifteen minutes before the scheduled start time to avoid any delays entering the earnings call.
For those who cannot listen to the live call, a telephonic replay of the call will be available through March 20, 2025 and may be accessed by dialing U.S. (Toll Free): (877) 660-6853 or International: (201) 612-7415 and entering the passcode of 13751412.
About Nine Energy Service
Nine Energy Service is an oilfield services company that offers completion solutions within North America and abroad. The Company brings years of experience with a deep commitment to serving clients with smarter, customized solutions and world-class resources that drive efficiencies. Serving the global oil and gas industry, Nine continues to differentiate itself through superior service quality, wellsite execution and cutting-edge technology. Nine is headquartered in Houston, Texas with operating facilities in the Permian, Eagle Ford, Haynesville, SCOOP/STACK, Niobrara, Barnett, Bakken, Marcellus, Utica and Canada.
For more information on the Company, please visit Nine's website at nineenergyservice.com.
Forward Looking Statements
The foregoing contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are those that do not state historical facts and are, therefore, inherently subject to risks and uncertainties. Forward-looking statements also include statements that refer to or are based on projections, uncertain events or assumptions. The forward-looking statements included herein are based on current expectations and entail various risks and uncertainties that could cause actual results to differ materially from those forward-looking statements. Such risks and uncertainties include, among other things, the level of capital spending and well completions by the onshore oil and natural gas industry, which may be affected by geopolitical and economic developments in the U.S. and globally, including conflicts, instability, acts of war or terrorism in oil producing countries or regions, particularly Russia, the Middle East, South America and Africa, as well as actions by members of the Organization of the Petroleum Exporting Countries and other oil
exporting nations; general economic conditions and inflation, particularly, cost inflation with labor or materials; equipment and supply chain constraints; the effects of tariffs and other trade measures on the Company's business; the Company's ability to attract and retain key employees, technical personnel and other skilled and qualified workers; the Company's ability to maintain existing prices or implement price increases on our products and services; pricing pressures, reduced sales, or reduced market share as a result of intense competition in the markets for the Company's dissolvable plug products; conditions inherent in the oilfield services industry, such as equipment defects, liabilities arising from accidents or damage involving our fleet of trucks or other equipment, explosions and uncontrollable flows of gas or well fluids, and loss of well control; the Company's ability to implement and commercialize new technologies, services and tools; the Company's ability to grow its completion tool business domestically and internationally; the adequacy of the Company's capital resources and liquidity, including the ability to meet its debt obligations; the Company's ability to manage capital expenditures; the Company's ability to accurately predict customer demand, including that of its international customers; the loss of, or interruption or delay in operations by, one or more significant customers, including certain of the Company's customers outside of the United States; the loss of or interruption in operations of one or more key suppliers; the incurrence of significant costs and liabilities resulting from litigation; cybersecurity risks; changes in laws or regulations regarding issues of health, safety and protection of the environment; and other factors described in the "Risk Factors" and "Business" sections of the Company's most recently filed Annual Report on Form 10-K and subsequently filed Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof, and, except as required by law, the Company undertakes no obligation to update those statements or to publicly announce the results of any revisions to any of those statements to reflect future events or developments.
NINE ENERGY SERVICE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME
(LOSS)
(In Thousands, Except Share and Per Share Amounts)
(Unaudited)
Three Months Ended Year Ended December 31,
-------------------------- ----------------------------
December 31, September
2024 30, 2024 2024 2023
------------ ------------ ---------- ----------
Revenues $ 141,426 $ 138,157 $ 554,104 $ 609,526
Cost and expenses
Cost of revenues
(exclusive of
depreciation and
amortization
shown separately
below) 115,224 113,451 456,729 490,750
General and
administrative
expenses 14,185 12,366 51,298 59,817
Depreciation 6,032 6,226 25,594 29,141
Amortization of
intangibles 2,795 2,796 11,183 11,516
(Gain) loss on
revaluation of
contingent
liability (87) 383 104 437
(Gain) loss on
sale of property
and equipment (229) 484 256 292
---------- ---------- ---------- ----------
Income from
operations 3,506 2,451 8,940 17,573
Interest expense 12,868 12,879 51,321 51,119
Interest income (189) (196) (849) (1,270)
Other income (162) (162) (648) (648)
---------- ---------- ---------- ----------
Loss before
income taxes (9,011) (10,070) (40,884) (31,628)
(Benefit)
provision for
income taxes (168) 73 198 585
---------- ---------- ---------- ----------
Net loss $ (8,843) $ (10,143) $ (41,082) $ (32,213)
Loss per share
Basic $ (0.22) $ (0.26) $ (1.11) $ (0.97)
Diluted $ (0.22) $ (0.26) $ (1.11) $ (0.97)
Weighted average
shares
outstanding
Basic 40,104,614 39,209,798 37,172,635 33,282,234
Diluted 40,104,614 39,209,798 37,172,635 33,282,234
Other
comprehensive
loss, net of
tax
Foreign currency
translation
adjustments, net
of tax of $0 and
$0 $ (381) $ (9) $ (547) $ (31)
---------- ---------- ---------- ----------
Total other
comprehensive
loss, net of
tax (381) (9) (547) (31)
---------- ---------- ---------- ----------
Total
comprehensive
loss $ (9,224) $ (10,152) $ (41,629) $ (32,244)
NINE ENERGY SERVICE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
(Unaudited)
At December 31,
------------------------
2024 2023
-------- --------
Assets
Current assets
Cash and cash equivalents $ 27,880 $ 30,840
Accounts receivable, net 81,157 88,449
Income taxes receivable 284 490
Inventories, net 50,781 54,486
Prepaid expenses 9,982 8,869
Other current assets 380 499
-------- --------
Total current assets 170,464 183,633
Property and equipment, net 70,518 82,366
Operating lease right of use assets, net 37,252 42,056
Finance lease right of use assets, net 29 51
Intangible assets, net 79,246 90,429
Other long-term assets 2,567 3,449
-------- --------
Total assets $ 360,076 $ 401,984
-------- --------
Liabilities and Stockholders' Equity
(Deficit)
Current liabilities
Accounts payable $ 36,052 $ 33,379
Accrued expenses 30,676 36,171
Current portion of long-term debt 3,580 2,859
Current portion of operating lease
obligations 11,216 10,314
Current portion of finance lease
obligations 21 31
-------- --------
Total current liabilities 81,545 82,754
Long-term liabilities
Long-term debt 317,264 320,520
Long-term operating lease obligations 26,710 32,594
Other long-term liabilities 621 1,746
-------- --------
Total liabilities 426,140 437,614
Stockholders' equity (deficit)
Common stock (120,000,000 shares
authorized at $.01 par value; 42,348,643
and 35,324,861 shares issued and
outstanding at December 31, 2024 and
December 31, 2023, respectively) 423 353
Additional paid-in capital 806,231 795,106
Accumulated other comprehensive loss (5,406) (4,859)
Accumulated deficit (867,312) (826,230)
-------- --------
Total stockholders' equity (deficit) (66,064) (35,630)
-------- --------
Total liabilities and stockholders'
equity (deficit) $ 360,076 $ 401,984
-------- --------
NINE ENERGY SERVICE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
Year Ended December 31,
-----------------------------
2024 2023
--------- ---------
Cash flows from operating activities
Net loss $ (41,082) $ (32,213)
Adjustments to reconcile net loss to net
cash provided by operating activities
Depreciation 25,594 29,141
Amortization of intangibles 11,183 11,516
Amortization of deferred financing
costs 7,602 7,413
Amortization of operating leases 13,256 12,524
Provision for doubtful accounts 526 333
Provision for inventory obsolescence 1,738 2,320
Stock-based compensation expense 2,946 2,169
Loss on sale of property and equipment 256 292
Loss on revaluation of contingent
liability 104 437
Changes in operating assets and
liabilities, net of effects from
acquisitions
Accounts receivable, net 6,724 16,489
Inventories, net 1,710 5,219
Prepaid expenses and other current
assets (995) 1,148
Accounts payable and accrued
expenses (2,092) 1,058
Income taxes receivable/payable 212 252
Operating lease obligations (13,080) (12,344)
Other assets and liabilities (1,407) (245)
--------- ---------
Net cash provided by operating
activities 13,195 45,509
--------- ---------
Cash flows from investing activities
Proceeds from sales of property and
equipment 585 606
Proceeds from property and equipment
casualty losses - 840
Purchases of property and equipment (14,763) (24,603)
--------- ---------
Net cash used in investing
activities (14,178) (23,157)
--------- ---------
Cash flows from financing activities
Proceeds from revolving credit facility 3,000 40,000
Payments on revolving credit facility (13,000) (15,000)
Proceeds from units offering, net of
discount - 279,750
Redemption of senior notes due 2023 - (307,339)
Cost of debt issuance - (6,290)
Proceeds from short-term debt 5,762 4,733
Payments of short-term debt (5,041) (4,141)
Principle payments on finance leases (49) (217)
Payments of contingent liability (604) (387)
Proceeds from issuance of common stock
under ATM program 8,249 -
Vesting of restricted stock and stock
units - (2)
--------- ---------
Net cash used in financing
activities (1,683) (8,893)
--------- ---------
Impact of foreign currency exchange on
cash (294) (64)
--------- ---------
Net (decrease) increase in cash and cash
equivalents (2,960) 13,395
Cash and cash equivalents
Beginning of period 30,840 17,445
--------- ---------
End of period $ 27,880 $ 30,840
--------- ---------
NINE ENERGY SERVICE, INC.
RECONCILIATION OF ADJUSTED EBITDA
(In Thousands)
(Unaudited)
Three Months Ended Year Ended December 31,
---------------------- ----------------------------
December
31, September
2024 30, 2024 2024 2023
-------- ------------ ------- -------
Net loss $(8,843) $ (10,143) $ (41,082) $(32,213)
Interest
expense 12,868 12,879 51,321 51,119
Interest
income (189) (196) (849) (1,270)
Depreciation 6,032 6,226 25,594 29,141
Amortization
of
intangibles 2,795 2,796 11,183 11,516
(Benefit)
provision for
income taxes (168) 73 198 585
------ ------- ------- -------
EBITDA $12,495 $ 11,635 $ 46,365 $ 58,878
(Gain) loss on
revaluation
of contingent
liability
(1) (87) 383 104 437
Restructuring
charges 182 177 701 2,027
Stock-based
compensation 721 837 2,946 2,169
Cash award
expense 1,067 770 2,832 2,698
Certain
refinancing
costs (2) - - - 6,396
(Gain) loss on
sale of
property and
equipment (229) 484 256 292
Legal fees and
settlements
(3) - - - 69
------ ------- ------- -------
Adjusted
EBITDA $14,149 $ 14,286 $ 53,204 $ 72,966
------ ------- ------- -------
(1) Amounts relate to the revaluation of contingent liability associated with
a 2018 acquisition.
(2) Amounts represent fees and expenses relating to our units offering and
other refinancing activities, including cash incentive compensation to
employees following the successful completion of the units offering, that were
not capitalized.
(3) Amounts represent fees and legal settlements associated with legal
proceedings brought pursuant to the Fair Labor Standards Act and/or similar
state laws.
NINE ENERGY SERVICE, INC.
RECONCILIATION AND CALCULATION OF ADJUSTED ROIC
(In Thousands)
(Unaudited)
Three Months Ended Year Ended December 31,
-------------------------- --------------------------
December 31, September
2024 30, 2024 2024 2023
------------ ------------ ------- -------
Net loss $ (8,843) $(10,143) $(41,082) $(32,213)
Add back:
Interest
expense 12,868 12,879 51,321 51,119
Interest
income (189) (196) (849) (1,270)
Certain
refinancing
costs (1) - - - 6,396
Restructuring
charges 182 177 701 2,027
------- ------- ------- -------
Adjusted
after-tax net
operating
income $ 4,018 $ 2,717 $ 10,091 $ 26,059
Total capital as
of prior
period-end:
Total
stockholders'
deficit $(57,561) $(49,715) $(35,630) $(23,507)
Total debt 350,000 352,730 359,859 341,606
Less: cash and
cash
equivalents (15,652) (26,027) (30,840) (17,445)
------- ------- ------- -------
Total capital as
of prior
period-end $276,787 $276,988 $293,389 $300,654
------- ------- ------- -------
Total capital as
of period-end:
Total
stockholders'
deficit $(66,064) $(57,561) $(66,064) $(35,630)
Total debt 350,580 350,000 350,580 359,859
Less: cash and
cash
equivalents (27,880) (15,652) (27,880) (30,840)
------- ------- ------- -------
Total capital as
of period-end $256,636 $276,787 $256,636 $293,389
Average total
capital $266,712 $276,888 $275,013 $297,022
------- ------- ------- -------
ROIC -13.3% -14.7% -14.9% -10.8%
Adjusted ROIC 6.0% 3.9% 3.7% 8.8%
NINE ENERGY SERVICE, INC.
RECONCILIATION OF ADJUSTED GROSS PROFIT (LOSS)
(In Thousands)
(Unaudited)
Three Months Ended Year Ended December 31,
---------------------------- -------------------------
December 31, September 30,
2024 2024 2024 2023
------------- ------------- --------- ---------
Calculation of
gross profit:
Revenues $ 141,426 $ 138,157 $ 554,104 $ 609,526
Cost of revenues
(exclusive of
depreciation and
amortization
shown separately
below) 115,224 113,451 456,729 490,750
Depreciation
(related to cost
of revenues) 6,902 5,791 25,095 27,101
Amortization of
intangibles 2,795 2,796 11,183 11,516
--------- --------- --------- ---------
Gross profit $ 16,505 $ 16,119 $ 61,097 $ 80,159
========= ========= ========= =========
Adjusted gross
profit
reconciliation:
Gross profit $ 16,505 $ 16,119 $ 61,097 $ 80,159
Depreciation
(related to cost
of revenues) 6,902 5,791 25,095 27,101
Amortization of
intangibles 2,795 2,796 11,183 11,516
--------- --------- --------- ---------
Adjusted gross
profit $ 26,202 $ 24,706 $ 97,375 $ 118,776
========= ========= ========= =========
$(A)$ Adjusted EBITDA is defined as EBITDA (which is net income (loss) before interest, taxes, and depreciation and amortization) further adjusted for (i) goodwill, intangible asset, and/or property and equipment impairment charges, (ii) transaction and integration costs related to acquisitions, (iii) fees and expenses relating to our units offering and other refinancing activities, (iv) loss or gain on revaluation of contingent liabilities, (v) loss or gain on the extinguishment of debt, (vi) loss or gain on the sale of subsidiaries, (vii) restructuring charges, (viii) stock-based compensation and cash award expense, (ix) loss or gain on sale of property and equipment, and (x) other expenses or charges to exclude certain items which we believe are not reflective of ongoing performance of our business, such as legal expenses and settlement costs related to litigation outside the ordinary course of business. Management believes adjusted EBITDA provides useful information to us and our investors regarding our financial condition and results of operations because it allows us and them to more effectively evaluate our operating performance and compare the results of our operations from period to period without regard to our financing methods or capital structure and helps identify underlying trends in our operations that could otherwise be distorted by the effect of impairments, acquisitions and dispositions and costs that are not reflective of the ongoing performance of our business.
(B) Adjusted gross profit (loss) is defined as revenues less cost of revenues excluding depreciation and amortization. This measure differs from the GAAP definition of gross profit (loss) because we do not include the impact of depreciation and amortization, which represent non-cash expenses. Our management believes adjusted gross profit (loss) provides useful information to us and our investors regarding our financial condition and results of operation and helps management evaluate our operating performance by eliminating the impact of depreciation and amortization, which we do not consider indicative of our core operating performance.
(C) Adjusted return on invested capital ("adjusted ROIC") is defined as adjusted after-tax net operating profit (loss), divided by average total capital. We define adjusted after-tax net operating profit (loss), which is a non-GAAP measure, as net income (loss) plus (i) goodwill, intangible asset, and/or property and equipment impairment charges, (ii) transaction and integration costs related to acquisitions, (iii) fees and expenses relating to our units offering and other refinancing activities, (iv) interest expense (income), (v) restructuring charges, (vi) loss (gain) on the sale of subsidiaries, (vii) loss (gain) on extinguishment of debt, and (viii) the provision (benefit) for deferred income taxes. We define total capital as book value of equity (deficit) plus the book value of debt less balance sheet cash and cash equivalents. We compute and use the average of the current and prior period-end total capital in determining adjusted ROIC. Management believes adjusted ROIC provides useful information to us and our investors regarding our financial condition and results of operations because it quantifies how well we generate operating income relative to the capital we have invested in our business and illustrates the profitability of a business or project taking into account the capital invested, and management uses adjusted ROIC to assist them in capital resource allocation decisions and in evaluating business performance.
View source version on businesswire.com: https://www.businesswire.com/news/home/20250305899007/en/
CONTACT: Nine Energy Service Investor Contact:
Heather Schmidt
Senior Vice President, Strategic Development and Investor Relations
(281) 730-5113
investors@nineenergyservice.com
(END) Dow Jones Newswires
March 05, 2025 17:15 ET (22:15 GMT)
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