Nine(US:NINE)2024-03-08 16:23Financial Data and Key Metrics Changes - Company revenue for the year was $609.5 million, with a net loss of $32.2 million or negative $0.97 per diluted share [8] - Adjusted EBITDA for the year was $73 million, with adjusted EBITDA for Q4 at $14.6 million, an increase of 26% over Q3 [8][49] - The average DSO for 2023 was 53 days, and the company reported net cash provided by operating activities of $45.5 million [12] Business Line Data and Key Metrics Changes - Cementing revenue for Q4 was $52.3 million, an increase of approximately 1% [25] - Completion tool revenue was $36.1 million, an increase of approximately 11% [52] - Coiled tubing revenue for Q4 was $27.7 million, a decrease of approximately 1% [26] Market Data and Key Metrics Changes - The rig count in the U.S. declined by approximately 20% from 779 at the end of 2022 to 622 at the end of 2023 [18] - International revenue increased by approximately 16% year-over-year, with a shift from 4% to 5% of total revenues coming from non-North America markets [21][34] Company Strategy and Development Direction - The company aims to be an asset and labor-light business that combines excellent service with forward-leaning technology to help customers lower completion costs [14] - The introduction of new tools, such as the Pincer hybrid frac plug, is expected to enhance market share and customer base, particularly in the Middle East and Argentina [21][22] - The company is formalizing sustainability efforts and quantifying greenhouse gas emissions to improve data collection and reduce emissions [22] Management's Comments on Operating Environment and Future Outlook - The management noted that the oil and gas market remained volatile in 2023, but they are confident in navigating market changes and capitalizing on improving conditions [18][14] - For Q1 2024, the company anticipates revenue to remain flat compared to Q4 2023, projecting between $135 million and $145 million [28] - The management expressed optimism about future activity levels, particularly in natural gas basins due to planned LNG projects [28] Other Important Information - The company reduced borrowings under the revolving credit facility by approximately $20 million since refinancing in January 2023 [10] - The total CapEx spend for 2023 was approximately $22.3 million, below the original guidance of $25 million to $35 million [53] Q&A Session Summary Question: What percentage of total revenues are now being generated from the non-North America market? - The percentage has increased from around 4% in 2022 to closer to 5% in 2023, with a focus on deliberate growth in international markets [34] Question: How is the international market performing geographically? - The primary regions for international sales are the Middle East and Argentina, with sales also occurring in countries like China [35] Question: What were the drivers behind strong incremental margins in Q4? - The strong margins were attributed to the absence of operational inefficiencies seen in August and a favorable sales mix with increased international sales [37] Question: What is the EBITDA level required for breakeven free cash flow? - Approximately $65 million of EBITDA is needed for free cash flow breakeven, excluding the impact of working capital [40] Question: What is the general sentiment of private operators regarding budget planning? - Private operators are cautious but may respond quickly to market changes, with potential for increased spending if conditions improve [44][46] Question: How quickly can the company respond to changes in market conditions? - The company has demonstrated the ability to flexibly respond to market changes within a quarter, leveraging a high variable cost structure [78]