Nine(US:NINE)2024-08-06 19:54Financial Data and Key Metrics Changes - Revenue for Q2 2024 was $132.4 million, within the guidance of $130 million to $140 million [4] - Adjusted EBITDA was $9.7 million, and diluted EPS was negative $0.40 [4] - Cash and cash equivalents were $26 million, with total liquidity of $50.8 million as of June 30, 2024 [8] - General and administrative expenses were $12.5 million, and depreciation and amortization expenses were $9.4 million [10] - CapEx spend for Q2 was $2.5 million, with a revised full-year CapEx range of $10 million to $15 million [10] Business Line Data and Key Metrics Changes - Cementing revenue decreased by approximately 5% to $45.8 million, with a 2% decrease in completed jobs [8] - Wireline revenue was flat at $28 million, with a 2% decrease in completed stages but a 2% increase in average blended revenue per stage [9] - Completion tool revenue decreased by approximately 8% to $32.4 million, with a 10% decrease in completed stages [9] - Coiled tubing revenue decreased by approximately 15% to $26.2 million, with a 23% decrease in days worked [9] Market Data and Key Metrics Changes - The U.S. land rig count has seen a decline of over 200 rigs since the end of 2022, impacting revenue and earnings [4] - Natural gas prices remain around $2, leading to delayed completions and rig declines [12] - The rig count in Q3 is expected to be relatively flat compared to Q2, with projected revenue between $127 million and $137 million [12] Company Strategy and Development Direction - The company aims to grow its international tools business as part of its medium- to long-term strategy [6] - The focus is on enhancing efficiency and maintaining flexibility in operations to capitalize on market recovery [17] - The company is optimistic about the medium- and long-term outlook for the gas market, anticipating increased power demand in the U.S. [12][23] Management's Comments on Operating Environment and Future Outlook - Management noted that the current market is challenging, but they are prepared to capitalize on growth opportunities when they arise [12][24] - The company believes it can maintain a competitive edge due to its asset-light business model and strong team [13] - Management expressed confidence in the potential for a market rebound in the back half of 2025 [24] Other Important Information - The company completed 926 cementing jobs in Q2, a decrease of approximately 2% [8] - The average blended revenue per job in cementing decreased by approximately 3% [8] - The company has implemented a $30 million ATM program to provide financial flexibility [8] Q&A Session Summary Question: What service lines are being positively impacted by the refracs? - Management indicated that all service lines, including completion tools, cementing, wireline, and coiled tubing, are positively impacted by refracs, with significant growth anticipated in this market [14] Question: Why is there confidence in relatively flat revenues and profitability despite rig count declines? - Management noted strong performance in the refrac business and improvements in cementing, which are helping to close gaps in revenue [15] Question: Any early indications of CapEx for Q3? - Management has not provided specific guidance on the split between quarters but has guided for the year [16] Question: How do you see the international side for completion tools impacting Q3? - International sales are included in the guidance, but they are expected to be lumpy; management is optimistic about future work [18] Question: Has pricing stabilized for cementing, wireline, and coiled tubing? - Management confirmed that pricing has stabilized, although there may be incremental pressures depending on commodity prices [19] Question: What percentage of refrac jobs are in the Eagle Ford and Bakken? - The majority of refrac jobs are in the Eagle Ford and Bakken, where there is significant Tier 1 acreage [21] Question: How can the company ramp up quickly when activity increases? - Management emphasized the importance of maintaining flexibility and not cutting into the company's capabilities, ensuring readiness for market recovery [22][24]