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Nine(NINE) - 2024 Q2 - Quarterly Report
NINENine(NINE)2024-08-05 21:43
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Revenue Performance - Revenues decreased by 29.0million,or1829.0 million, or 18%, to 132.4 million for Q2 2024 compared to Q2 2023, primarily due to volume and pricing decreases driven by a reduction in the U.S. rig count[89] - Cementing revenue decreased by 12.3million,or2112.3 million, or 21%, due to pricing decreases and an 8% job count decrease compared to Q2 2023[90] - Coiled tubing revenue decreased by 7.3 million, or 22%, driven by pricing decreases and a 10% decrease in total days worked compared to Q2 2023[90] - Tools revenue decreased by 6.4million,or176.4 million, or 17%, attributed to a 14% decrease in completion tools stages compared to Q2 2023[91] - Revenues decreased by 50.3 million, or 15%, to 274.5millionforthefirstsixmonthsof2024,primarilyduetovolumeandpricingdecreasesacrossallservicelines[101]−RevenuesforthethreemonthsendedJune30,2024,were274.5 million for the first six months of 2024, primarily due to volume and pricing decreases across all service lines[101] - Revenues for the three months ended June 30, 2024, were 132,401 thousand, a decline of 18.0% from 161,428thousandinthesameperiodof2023[123]ProfitabilityandLoss−Adjustedgrossprofitdecreasedby161,428 thousand in the same period of 2023[123] Profitability and Loss - Adjusted gross profit decreased by 13.6 million, or 40%, to 20.4millionforQ22024comparedtoQ22023[89]−NetlossforQ22024was20.4 million for Q2 2024 compared to Q2 2023[89] - Net loss for Q2 2024 was 14.0 million, compared to a net loss of 2.5millioninQ22023,representinganincreaseinlossof4532.5 million in Q2 2023, representing an increase in loss of 453%[89] - Adjusted gross profit decreased by 23.8 million, or 34%, to 46.5millionforthefirstsixmonthsof2024comparedtothesameperiodin2023[103]−Netlossincreasedby46.5 million for the first six months of 2024 compared to the same period in 2023[103] - Net loss increased by 13.5 million, or 156%, to 22.1millionforthefirstsixmonthsof2024[111]−AdjustedEBITDAdecreasedby22.1 million for the first six months of 2024[111] - Adjusted EBITDA decreased by 22.0 million, or 47%, to 24.8millionforthefirstsixmonthsof2024[111]−AdjustedEBITDAforthethreemonthsendedJune30,2024,was24.8 million for the first six months of 2024[111] - Adjusted EBITDA for the three months ended June 30, 2024, was 9,735 thousand, down from 21,714thousandinthesameperiodof2023,representingadecreaseofapproximately55.221,714 thousand in the same period of 2023, representing a decrease of approximately 55.2%[115] - Adjusted gross profit for the three months ended June 30, 2024, was 20,353 thousand, down from 33,986thousandinthesameperiodof2023,reflectingadecreaseofapproximately40.433,986 thousand in the same period of 2023, reflecting a decrease of approximately 40.4%[123] Cost Management - Cost of revenues decreased by 15.4 million, or 12%, to 112.0millionforQ22024,primarilyduetoreducedactivityincertainservicelines[92]−Costofrevenuesdecreasedby112.0 million for Q2 2024, primarily due to reduced activity in certain service lines[92] - Cost of revenues decreased by 26.5 million, or 10%, to 228.1millionforthefirstsixmonthsof2024[102]−Generalandadministrativeexpensesdecreasedby228.1 million for the first six months of 2024[102] - General and administrative expenses decreased by 9.2 million, or 27%, to 24.7millionforthefirstsixmonthsof2024[103]−Depreciationexpensedecreasedby24.7 million for the first six months of 2024[103] - Depreciation expense decreased by 1.5 million, or 10%, to 13.3millionforthefirstsixmonthsof2024[105]−Amortizationofintangiblesdecreasedby13.3 million for the first six months of 2024[105] - Amortization of intangibles decreased by 0.2 million, or 3%, to 5.6millionforthefirstsixmonthsof2024[106]−Non−operatingexpensesincreasedby5.6 million for the first six months of 2024[106] - Non-operating expenses increased by 0.1 million, or 1%, to 24.8millionforthefirstsixmonthsof2024[109]MarketConditions−TheU.S.landrigcountdeclinedbyover40rigsinthefirsthalfof2024,followingadeclineofover150rigsfromtheendof2022totheendof2023[87]−Naturalgaspricesaveraged24.8 million for the first six months of 2024[109] Market Conditions - The U.S. land rig count declined by over 40 rigs in the first half of 2024, following a decline of over 150 rigs from the end of 2022 to the end of 2023[87] - Natural gas prices averaged 2.10 in the first half of 2024, which is 17% lower than average prices in 2023, contributing to decreased activity and lower rig counts[86] - The company anticipates that revenue, net income (loss), and adjusted EBITDA for Q3 2024 will be relatively flat compared to Q2 2024, with cautious optimism for medium and long-term recovery in the energy sector[87] Liquidity and Capital Expenditure - As of June 30, 2024, the company had a total liquidity position of 50.8million,consistingof50.8 million, consisting of 26.0 million in cash and cash equivalents and 24.8millionavailableundertheABLCreditFacility[127]−Thecompanyhasreduceditsplannedcapitalexpenditurebudgetfor2024tobetween24.8 million available under the ABL Credit Facility[127] - The company has reduced its planned capital expenditure budget for 2024 to between 10.0 million and 15.0milliontopreserveliquidityamidmarketdeclines[126]−Thecompanyanticipatessemiannualinterestpaymentsof15.0 million to preserve liquidity amid market declines[126] - The company anticipates semiannual interest payments of 19.5 million on the 2028 Notes, which began on August 1, 2023[127] - As of June 30, 2024, the company had 52.0millioninborrowingsundertheABLCreditFacility,withapproximately52.0 million in borrowings under the ABL Credit Facility, with approximately 24.8 million available after accounting for outstanding letters of credit[139] Debt and Compliance - The 2028 Notes bear an annual interest rate of 13.000% and will mature on February 1, 2028, with interest payable semi-annually[132] - The company was in compliance with all covenants contained in the 2028 Notes Indenture and the ABL Credit Agreement as of June 30, 2024[134][138] - The company did not make an Excess Cash Flow Offer on May 15, 2024, as the Excess Cash Flow Amount was 0[133]CashFlowActivities−Netcashprovidedbyoperatingactivitieswas0[133] Cash Flow Activities - Net cash provided by operating activities was 4.1 million for the first six months of 2024, a decrease of 27.0millioncomparedto27.0 million compared to 31.1 million in the same period of 2023, primarily due to an increased net loss[142] - Net cash used in investing activities was 8.1millioninthefirstsixmonthsof2024,adecreasefrom8.1 million in the first six months of 2024, a decrease from 11.1 million in the same period of 2023, attributed to reduced cash purchases of property and equipment[143] - Net cash used in financing activities was 0.7millioninthefirstsixmonthsof2024,comparedto0.7 million in the first six months of 2024, compared to 3.9 million in net cash provided in the same period of 2023, largely due to the absence of proceeds from the Units offering and ABL Credit Facility[144] Growth Strategy - The company continues to evaluate potential acquisitions as part of its growth strategy, although it does not budget for them[125] - The company entered into an equity distribution agreement allowing the sale of up to 30.0millionincommonstock,generatingnetproceedsof30.0 million in common stock, generating net proceeds of 6.8 million from the sale of 4,199,074 shares during the three months ended June 30, 2024[129] - The company completed a public offering of 300,000 units with an aggregate stated amount of 300.0million,receivingproceedsof300.0 million, receiving proceeds of 279.8 million after deductions, which were used to redeem $307.3 million of 8.750% Senior Notes due 2023[130]