Nine(US:NINE)2023-03-08 20:45Financial Data and Key Metrics Changes - In 2022, the company achieved a revenue increase of 70% year-over-year, with adjusted EBITDA rising over 17 times and adjusted EBITDA margin increasing from 1% to 16% [24] - For Q4 2022, revenue was $166.7 million, with adjusted EBITDA of $30 million, reflecting an adjusted EBITDA margin of 18% [12][31] - The company reported net income of $14.4 million for the full year 2022, or $0.45 per diluted share [31] Business Line Data and Key Metrics Changes - Completion tools saw a 38% year-over-year increase in the total number of stages completed, outperforming the U.S. EIA completions growth of 22% [7] - Cementing services increased jobs completed by approximately 50% year-over-year, with an average price per job up by 34% [8] - Wireline services completed 26% more stages year-over-year, with an average price per stage increasing by 18% [9] - Coiled tubing days worked increased by approximately 37% year-over-year, with average day rates rising by 40% [28] Market Data and Key Metrics Changes - The company grew its market share in wireline and completion tools from approximately 18% in 2021 to 20% in 2022, and in cementing from 17% to 19% [26] - The company estimates holding approximately 20% of the total U.S. plug market, including both composite and dissolvable plugs [27] Company Strategy and Development Direction - The company is focused on maintaining a strong balance sheet and plans to continue deleveraging using free cash flow to repay debt [20][34] - Investment in technologies that drive profitability while reducing emissions is a priority, including the conversion of hydraulic wireline units to electric [30] - The company aims to capitalize on sustained cycles in the oilfield services space, leveraging service line diversity and geographic diversity [52] Management's Comments on Operating Environment and Future Outlook - Management noted that the labor market remains constrained, which continues to be a significant challenge for the oilfield services sector [38] - For Q1 2023, the company anticipates a slight decline in revenue compared to Q4 2022, projecting revenue of $160 million to $165 million [40] - The company expressed confidence in its ability to navigate market fluctuations and maintain a solid earnings profile despite recent challenges in natural gas prices [43][51] Other Important Information - The company reported a total liquidity position of $84 million as of December 31, 2022, with $17.4 million in cash and cash equivalents [15] - The effective tax rate for 2022 was 3.7%, primarily due to the company's tax position in state and foreign jurisdictions [17] Q&A Session Summary Question: What is the guidance for incremental margins for Q1? - Management indicated that while there will be some degradation to the margin, it is expected to remain strong, above 2019 profitability levels [57] Question: Are there any immediate concerns regarding supply chain headwinds? - Management noted ongoing challenges in the supply chain, particularly with heavy equipment, and highlighted labor constraints as a significant concern for the oilfield service sector [60][62] Question: What factors contributed to the substantial market share gains last year? - The company attributed market share gains to improved service execution, technical capabilities, and a focus on selective customer engagement [74][76] Question: How does the competitive landscape change with the current gas market conditions? - Management expressed confidence that significant price reductions in the sector are unlikely, given the previous negative net income in 2021 and the current market dynamics [72] Question: What is the company's strategy regarding emission-friendly cement? - The company is developing its own green-friendly cement and is aware of the challenges in maintaining wellbore integrity with new materials [86]