Nine(US:NINE)2024-08-05 21:43Revenue Performance - Revenues decreased by $29.0 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 $12.3 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 $6.4 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 $274.5 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 $161,428 thousand in the same period of 2023[123] Profitability and Loss - Adjusted gross profit decreased by $13.6 million, or 40%, to $20.4 million for Q2 2024 compared to Q2 2023[89] - Net loss for Q2 2024 was $14.0 million, compared to a net loss of $2.5 million in Q2 2023, representing an increase in loss of 453%[89] - Adjusted gross profit decreased by $23.8 million, or 34%, to $46.5 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 $22.1 million for the first six months of 2024[111] - Adjusted EBITDA decreased by $22.0 million, or 47%, to $24.8 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 $21,714 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 $33,986 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 $112.0 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 $228.1 million for the first six months of 2024[102] - General and administrative expenses decreased by $9.2 million, or 27%, to $24.7 million for the first six months of 2024[103] - Depreciation expense decreased by $1.5 million, or 10%, to $13.3 million for the first six months of 2024[105] - Amortization of intangibles decreased by $0.2 million, or 3%, to $5.6 million for the first six months of 2024[106] - Non-operating expenses increased by $0.1 million, or 1%, to $24.8 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 $50.8 million, consisting of $26.0 million in cash and cash equivalents and $24.8 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 $15.0 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 $52.0 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] Cash Flow Activities - Net cash provided by operating activities was $4.1 million for the first six months of 2024, a decrease of $27.0 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 $8.1 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 $0.7 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 $30.0 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 $300.0 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]