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Nine(NINE) - 2024 Q2 - Earnings Call Transcript
NINENine(NINE)2024-08-06 19:54
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Financial Data and Key Metrics Changes - Revenue for Q2 2024 was 132.4million,withintheguidanceof132.4 million, within the guidance of 130 million to 140million[4]−AdjustedEBITDAwas140 million [4] - Adjusted EBITDA was 9.7 million, and diluted EPS was negative 0.40[4]−Cashandcashequivalentswere0.40 [4] - Cash and cash equivalents were 26 million, with total liquidity of 50.8millionasofJune30,2024[8]−Generalandadministrativeexpenseswere50.8 million as of June 30, 2024 [8] - General and administrative expenses were 12.5 million, and depreciation and amortization expenses were 9.4million[10]−CapExspendforQ2was9.4 million [10] - CapEx spend for Q2 was 2.5 million, with a revised full-year CapEx range of 10millionto10 million to 15 million [10] Business Line Data and Key Metrics Changes - Cementing revenue decreased by approximately 5% to 45.8million,witha245.8 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 32.4million,witha1032.4 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,leadingtodelayedcompletionsandrigdeclines[12]−TherigcountinQ3isexpectedtoberelativelyflatcomparedtoQ2,withprojectedrevenuebetween2, 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 137million[12]CompanyStrategyandDevelopmentDirection−Thecompanyaimstogrowitsinternationaltoolsbusinessaspartofitsmedium−tolong−termstrategy[6]−Thefocusisonenhancingefficiencyandmaintainingflexibilityinoperationstocapitalizeonmarketrecovery[17]−Thecompanyisoptimisticaboutthemedium−andlong−termoutlookforthegasmarket,anticipatingincreasedpowerdemandintheU.S.[12][23]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementnotedthatthecurrentmarketischallenging,buttheyarepreparedtocapitalizeongrowthopportunitieswhentheyarise[12][24]−Thecompanybelievesitcanmaintainacompetitiveedgeduetoitsasset−lightbusinessmodelandstrongteam[13]−Managementexpressedconfidenceinthepotentialforamarketreboundinthebackhalfof2025[24]OtherImportantInformation−Thecompanycompleted926cementingjobsinQ2,adecreaseofapproximately2137 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]