Nine(US:NINE)2023-11-07 20:07Financial Data and Key Metrics Changes - Revenue for Q3 2023 totaled $140.6 million, within the guidance range of $140 million to $150 million, with adjusted EBITDA of $11.6 million and an adjusted EBITDA margin of 8% [20][10] - The company reported a net cash used in operating activities of $9.9 million, with cash and cash equivalents at $12.2 million as of September 30, 2023 [12][25] - Diluted EPS was negative $0.39, reflecting the impact of declining activity levels and pricing pressure [20] Business Line Data and Key Metrics Changes - Completion tool revenue decreased by approximately 16% to $32.6 million, with a 6% decrease in completed stages [11] - Cementing revenue was $51.9 million, down approximately 11%, with a 13% decrease in completed jobs [27] - Coil tubing revenue decreased by approximately 17% to $27.9 million, with utilization at 47% [11] Market Data and Key Metrics Changes - The EIA reported a 10% decline in U.S. completions in Q3 compared to Q2, with significant declines in the Haynesville region [5] - The rig count has declined by over 150 rigs or approximately 20% since the end of 2022, impacting all service lines [20] Company Strategy and Development Direction - The company is focused on diversifying revenue streams towards completion tools and international markets, with the introduction of the new Pincer hybrid frac plug expected to enhance market share [14][6] - The strategy remains centered on providing an asset-light business model with innovative technology and excellent service [39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence that the business will return to trend in Q4, with expectations for improved activity levels driven by private operators if commodity prices remain supportive [4][13] - The sentiment in the market has shifted positively, with increased bids for work noted in October [13][43] Other Important Information - The company anticipates Q4 revenue to be slightly higher than Q3, projecting between $137 million and $147 million [30] - An inventory reserve of approximately $1.2 million in the completion tools business negatively impacted adjusted EBITDA [26] Q&A Session Summary Question: Was there any one-off event affecting product revenues during the quarter? - Management clarified that the decline in international sales was due to a return to normalized levels after a large one-off order in Q2 [16] Question: How is the sentiment in the market regarding private operators? - Management noted a positive shift in sentiment with increased customer activity and calls, indicating a potential for improved market conditions [42][43] Question: What are the expectations for gross margin in the services segment for the December quarter? - Management indicated that while specific guidance was not provided, they expect overall adjusted EBITDA and margins to improve compared to Q3 [45]