Nine Energy Service, Inc. Q1 FY2025 earnings call

• Revenue for Q1 was $150.5 million, upper range of guidance, 6% increase Q-over-Q. Adjusted EBITDA $16.5 million, 17% Q-over-Q increase, 26% incremental margin. - U.S. land market stable, rig count flat, but revenue growth in all service lines. Cementing saw 4% revenue increase and 11% jobs completed despite flat rig count. Completion tools revenue up due to market share gains in Permian with Plug offering. Wireline revenue up 7% due to efficient operations in Northeast. Coiled tubing revenue up 16% due to higher utilization. - Recent refinancing of ABL revolving credit facility to $125 million commitments, $50M accordion, maturing in 2027. - Q1 cash used in ops $5.3M, CapEx $4.3M, full year CapEx $15M-$25M unchanged.

Revenue for the quarter was $150.5 million. Cementing business: revenue $57.2 million, increase ~4%, jobs completed ~11%. Wireline: revenue $29.6 million, increase ~7%, stages completed ~15%. Completion tools: revenue $33.9 million, increase ~2%, stages completed ~14%. Coiled tubing: revenue $29.9 million, increase ~16%, days worked increased ~36%.

• Project Q2 revenue $138M-$148M, expect revenue and adjusted EBITDA decline vs Q1. - Uncertainty due to oil price decline, tariffs, and commodity price impacts.

• Oil price decline impact on industry activity. - Tariff impacts on wireline, coiled tubing, and tool components, difficulty in passing costs to customers. - Uncertainty in timing and magnitude of trade agreement impacts.

Q: Pricing pressures, which business line impacted?

A: So it's still very early, Waqar, to try and quantify the magnitude. I would say this pricing pressure is largely related to West Texas activities. We're seeing some pressure in the cementing division.

Q: Tariff impact on passing costs to customers?

A: Well, I think you're so well versed in all things, oilfield service. And the service sector really at large does not have the capacity to absorb these tariffs. And so I think most of us will be going to our customers to absorb those tariffs. They are well understood. So unlike times in the past where you may face some organic issue relative to pricing, this is a matter that is well publicized and very transparent. So we are absolutely planning to pass those tariffs on.

Q: Natural gas markets, relocation of equipment?

A: Yes. So we right now are not planning to relocate any equipment. I do know you've heard from some of our customers. You heard from Coterra specifically that they'll focus their CapEx on the gas markets. But right now, we are not planning to relocate.

Q: International completion tool sales?

A: I mean, yes, we had international sales there, and we're really pleased with how our multicycle barrier valve is performing. Really pleased with our outlook for the international tool sales this year, definitely a very bright spot as well.

Q: Plug business and demand?

A: Well, good morning, John, we always appreciate your questions and participation. I think when you look out -- I'll take the second question first. OFS seems to be -- it doesn't seem to have any immunity in any segment anywhere as it relates to pricing pressure. So when pricing pressure comes or you deal with a market like this, it seems to be universally applied. On the first question, we really love to see these long laterals.

Q: International tool sales pull-through for other services?

A: No. I'll be really clear about that. We have, at our size and scale, no interest in proliferating any, what I'll call, bricks-and-mortar heavy equipment or human assets on the ground. So we are absolutely going after that international market from a product perspective and a technology perspective.