Nine Energy Service, Inc. Q2 FY2026 earnings call

• Overall Financial Position

  • Total liquidity as of June 30, 2026 was $46.8 million, consisting of $16.8 million in cash and cash equivalents and $30 million in available credit. Outstanding borrowings under the credit facility totaled $97.3 million.
  • Adjusted gross profit for Q2 was $19.9 million; G&A expense was $15.6 million, depreciation and amortization was $7.2 million, and net cash used in operating activities was $2.3 million. Year-to-date CapEx was $10.4 million after $4.8 million in Q2 spending.

• Operational Updates

  • One of the two out-of-service large-diameter coil tubing units returned to service in early Q3; the second remains under repair and is expected to return near the end of 2026, leaving coil tubing operations constrained in the near term.
  • Commercialization progress for new technologies is on track, with growing demand for dissolvable completion solutions as oil and gas operators extend well lateral lengths.
  • The company's diversified operations across service lines, basins, commodities, and domestic/international markets is a core competitive differentiator.

• Strategic Priorities

  • Maintaining disciplined execution, strict cost control, and continued development of the company's technology product portfolio.
  • Leveraging the company's strengthened financial position and asset-light operating model to navigate market volatility while pursuing profitable long-term growth.

Total Q2 2026 revenue was $141.8 million. The performance of each segment is as follows:

1. Cementing: Revenue of $55.3 million, 39% of total company revenue. Revenue increased 3% quarter-over-quarter, with 13% more jobs completed (1,155 total jobs) and an 8% decrease in average blended revenue per job, driven by job mix. It is a steady revenue contributor, but faced inflationary cost pressures that negatively impacted margins.
2. Completion Tools: Revenue of $37.1 million, 26% of total company revenue. Revenue increased 44% quarter-over-quarter, with a 45% increase in completed stages (28,256 total stages). Growth was driven by strong domestic sales gains and 17% year-to-date international revenue growth compared to 2025.
3. Coil Tubing: Revenue of $26.4 million, 19% of total company revenue. Revenue declined 2% quarter-over-quarter. Coil tubing days worked increased 16%, but average blended day rate decreased 15% due to job mix and increased downtime between jobs. Two large-diameter units (17% of the large-diameter fleet) were taken out of service unexpectedly for maintenance during the quarter. The segment also faced 12% quarter-over-quarter average inflation across consumables, labor, and repair costs.
4. Wireline: Revenue of $23 million, 16% of total company revenue. Revenue decreased 4% quarter-over-quarter. Completed stages fell 7% to 6,414, but average blended revenue per stage increased 3%. The company is executing a planned expansion in the Hainesville Basin.

• Full-year 2026 capital expenditure is projected to range between $20 million and $30 million, down from original expectations for spending near the upper end of the range; spending is now expected to land in the middle to lower end of the range.
• U.S. average rig count in Q3 2026 is expected to be relatively flat to slightly up compared to Q2 2026, with incremental activity dependent on sustained commodity prices.
• Q3 2026 revenue is projected to range between $133 million and $143 million; revenue and adjusted EBITDA are expected to be flat to modestly down compared to Q2 2026, driven by sustained revenue loss from the out-of-service coil tubing unit and cost inflation that continues to outpace pricing adjustments.
• Management expects inflationary and pricing turbulence to stabilize by Q4 2026, and remains constructive on long-term fundamentals for U.S. shale, efficient completion services, and growing natural gas demand.

• Uncertain macroeconomic and geopolitical conditions create commodity price volatility, which impacts upstream operator activity levels and creates market uncertainty for oilfield services.
• Inflationary cost pressures across labor, consumables, materials, and repairs consistently outpace pricing adjustments in the near term, leading to temporary margin compression, with lags between cost increases and customer re-pricing.
• Industry-wide oilfield service equipment attrition has reduced available excess capacity across the sector, leaving limited slack to replace unexpectedly out-of-service units, amplifying the impact of unexpected maintenance events.
• Sustained unexpected downtime of key revenue-generating specialized equipment creates near-term revenue and margin pressure, as the company retains skilled specialized crews rather than downsizing to preserve capacity for when the unit returns to service.
• Volatile commodity prices tied to geopolitical events can quickly disrupt pricing and activity stability, creating ongoing market uncertainty.

Q: An analyst asks how the unexpected loss of 17% of the large-diameter coil tubing fleet illustrates industry-wide equipment slack and attrition, beyond the fracking segment. / A: Management confirms there is very little excess equipment available industry-wide to replace the out-of-service units. U.S. available coil tubing units have fallen by almost 40% from pre-COVID 2019 levels, and new unit investment has dropped considerably. This equipment shortage means there is no slack to draw from when unexpected outages occur, though management notes the current outage is temporary. The issue is not isolated to fracking, and impacts all oilfield service segments. (312 characters)

Q: An analyst asks for an update on the Hainesville Basin wireline expansion and cross-service pull-through opportunities. / A: Management repositioned assets out of the Permian to Hainesville to target growing natural gas demand driven by data center and AI expansion. The basin has complex high-temperature, high-pressure wells that play to the company's technical strengths. To date, expansion progress has been strong, and the company expects incremental demand for plug services plus cross-selling opportunities for its existing cementing services in the basin. (327 characters)

Q: An analyst asks what factors drove completion tools revenue growth to outpace activity growth this quarter, after a prior period of decline. / A: Management attributes the outperformance to two key factors: stronger-than-expected international sales growth, driven by rising global demand for the company's dissolvable plug technology that has been well received by international operators, and meaningful domestic market share gains that outpaced overall market activity growth. The segment is currently performing very well across both core markets. (311 characters)

Q: An analyst asks how pricing power varies across service lines, and how much activity growth is needed to fully offset ongoing cost inflation. / A: More differentiated service lines have stronger pricing power: completion tools and cementing have the strongest pricing power, followed by coil tubing, with wireline having the least. While the company has offset a portion of inflation via price increases, large volume long-term customers are not repriced immediately, and repeated inflation spikes mean multiple rounds of re-pricing are required, creating ongoing near-term margin pressure. (324 characters)