Nine(US:NINE)2024-11-01 22:04Financial Data and Key Metrics Changes - Revenue for Q3 2024 was $138.2 million, exceeding the original guidance of $127 million to $137 million, with adjusted EBITDA of $14.3 million, representing a 47% increase quarter-over-quarter [6][28] - The company reported a diluted EPS of negative $0.26, with incremental adjusted EBITDA margins of approximately 79% [6][10] - Cash and cash equivalents stood at $15.7 million, with total liquidity of $43.3 million as of September 30, 2024 [16] Business Line Data and Key Metrics Changes - Cementing business revenue increased by approximately 12% quarter-over-quarter to $51.2 million, with jobs completed rising by 9% [20] - Wireline revenue remained flat at $27.9 million, with a 1% decrease in stages completed [21] - Coiled tubing revenue increased by approximately 5% to $27.7 million, with days worked increasing by 8% [22] Market Data and Key Metrics Changes - The average US rig count declined by approximately 3% from Q2, impacting overall activity levels [7] - Natural gas prices remained low, averaging just above $2, leading to reduced activity in the Haynesville and Northeast regions [7] Company Strategy and Development Direction - The company adopted a strategy to increase market share in cementing, achieving a 23% market share growth quarter-over-quarter [8] - Cost reduction initiatives have positively impacted profitability, with ongoing efforts to reduce operating costs and vendor consolidation [11][12] - The company is focused on innovation, with successful commercialization of new products like the pincer hybrid frac plug and frac dart [13][14] Management's Comments on Operating Environment and Future Outlook - Management anticipates a moderate activity pickup in 2025 if natural gas prices average $3 or above, which would encourage operators to resume activity [26][27] - For Q4, a slowdown is expected due to budget exhaustion and seasonal factors, with projected revenue between $132 million and $142 million [28] - Management expressed confidence in the repeatability of Q3 results in a similar rig count environment, emphasizing sustainable cost-cutting measures [29] Other Important Information - The company paid down approximately $5 million on its ABL credit facility during Q3, with current borrowings at $47 million [17] - The company has reduced its full-year 2024 CapEx range to $10 million to $15 million, down from $15 million to $25 million [24] Q&A Session Summary Question: What is leading to market share gains in cementing and other businesses? - Management attributed market share gains to a targeted strategy and specific customer focus, resulting in solid performance and sticky customer relationships [30] Question: How do international sales compare year-over-year? - International sales are expected to be lower this year, but management is optimistic about future growth and is working on a deliberate expansion strategy [31] Question: What is the run rate for EBITDA to achieve breakeven cash flow? - Management indicated that around $15 million per quarter would be the target for cash flow neutrality, with expectations for increased efficiencies [32][33] Question: Will costs return if activity picks up? - Management believes that cost reductions are sticky and will improve incremental margins on revenue going forward [34] Question: What do customers need to see for activity to pick up? - Customers are optimistic about medium to long-term natural gas demand, with a desire for prices to stabilize above $3 to spur activity [36] Question: Will there be an uplift in 2025? - Management expressed confidence that there will be an uplift in activity levels in 2025 [39]