Nine Energy Service, Inc. · AMEX:NINE
Nine Energy Service — Q3 2024 Earnings Presentation
29 slides from Nine Energy Service's earnings presentation, Nov 1, 2024
Slide 1: Q3 2024 IR Presentation
Nine Q3 2024 IR Presentation
Slide 2: Disclaimer: Forward-Looking Statements & Non-GAAP Financial Measures
DISCLAIMER 2 Forward-Looking Statements & Non-GAAP Financial Measures Certain statements in this presentation are forward-looking statements that are subject to a number of risks and uncertainties, many of which are beyond our control. All statements, other than statements of historical fact include
Slide 3: Company Overview
COMPANY OVERVIEW
Slide 4: Company Overview
COMPANY OVERVIEW 4 Revenue by service line1 Investment Highlights 20% 24% Completion Tools Asset, emissions and labor-light business Cementing model with strong barriers to entry driving Coiled Tubing greater cash generation 21% Wireline ~60% of business driven by technology- 35% based businesses (c
Slide 5: Strategy
STRATEGY 5 Asset Barriers to Service Differentiation Light Entry Execution Cash flow generation Asset, emissions and Establishing our "Stickier" depreciation- labor- light business company as a based service lines Returns (ROIC) model drives greater technology leader mitigate financial risk Defensib
Slide 6: Technology-Based Service Offering
TECHNOLOGY-BASED SERVICE OFFERING 6 Performance Delivered. Nine’s wide range of advanced technologies will accommodate any type of completion for 100% of wells drilled in the United States and Canada.
Slide 7: Asset Light Model
ASSET LIGHT MODEL 7 Pressure Pumping Wireline
Slide 8: Asset-Light Model Reduces Capex Needs
ASSET-LIGHT MODEL REDUCES CAPEX NEEDS 8 Nine has fundamentally reduced the capex needs to run the business Following 2016, Nine’s average 3-year capex from 2017 - 2019 was ~$53mm, versus coming out of 2020, where the 3-year average from 2021 - 2023 is ~$23mm, a reduction of ~57% Nine Annual Capex Sp
Slide 9: Market Share Overview
MARKET SHARE OVERVIEW 9 US Completions Market Share Nine US Wireline & Completion Tools % of stage completed1 21% 20% 20% 17% 18% 17% 2018 2019 2020 2021 2022 2023 US Cementing Market Share Nine U.S. Cementing Market Share in the Eagle Ford, Permian & Haynesville 2 19% 16% 17% 14% 15% 14% 2018 2019
Slide 10: Geographic and Commodity Diversity
GEOGRAPHIC AND COMMODITY DIVERSITY 10 Our Services CANADA – 1% Completion Tools Cementing BAKKEN – 5% Coiled Tubing DJ/NIOBRARA – 1% Wireline MARCELLUS/UTICA – 20% MIDCON – 1% ~4% of overall revenue comes PERMIAN – 36% BARNETT – 2% from outside NAM HAYNESVILLE – 14% EAGLE FORD – 17% Service Coverage
Slide 11: Continued Excellence in Safety
CONTINUED EXCELLENCE IN SAFETY 11 TRIR 2.47 1.5 1.44 1.26 0.88 0.77 0.63 0.30 0.48 0.41 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Slide 12: Customers Who Trust Us
CUSTOMERS WHO TRUST US 12 Diverse, Blue-chip customer base with minimal concentration
Slide 13: Technology Overview
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Slide 14: New Generation of Dissolvable Plugs
NEW GENERATION OF DISSOLVABLE PLUGS 14 Nine Stinger Dissolvable Plug PLUG OVERVIEW Shorter Design, decreasing plug size by over 70% Predictable and reliable dissolution for entire addressable isolation tool market Completely dissolvable, eliminating plug drill-out MARKET & FINANCIAL OVERVIEW High-vo
Slide 15: Nine Dissolvable Plug Benefits
NINE DISSOLVABLE PLUG BENEFITS 15 Neutral or Reduced AFE Increased IRR Reduced EMISSIONS Increased SAFETY with Fewer Humans at Surface
Slide 16: Dissolvable Plug Adoption Increasing
DISSOLVABLE PLUG ADOPTION INCREASING 16 2023 Total US Plug Market Share1 Dissolvable Plug Market Share2 ~75% of the US Dissolvable Plug Market share 15 – 25% is concentrated among four competitors, including Nine 16 – 34% Remaining Competitors Dissolvables & Composites 13 – 17% Competitor C % Increa
Slide 17: Pincer Hybrid Plug
PINCER HYBRID PLUG 17 An innovative hybrid design integrating composite and dissolvable materials, the Pincer is a considerable advancement in completion tool technology, eliminating geographical constraints and delivering optimal downhole efficiency PLUG OVERVIEW 47% less material than Scorpion fra
Slide 18: Scorpion Composite Plug
SCORPION COMPOSITE PLUG 18 Over 370,000+ plugs run Delivering secure and dramatically faster mill-out times, Nine offers a wide range of composite frac plugs for the longest and most complex laterals. SCORPION LONG RANGE BRIDGE (GEN1) Manufactured almost entirely of Designed to pass through damaged
Slide 19: Expanding into New Markets Through Technology
EXPANDING INTO NEW MARKETS THROUGH TECHNOLOGY 19 Refrac market – enables customers International Market to get product to market in 10-14 days versus traditional completions of ~6 months Nine’s patented Multi-Cycle Barrier Valves are helping expand the Company’s tool portfolio in the international m
Slide 20: Expanding Through ESG Technology
EXPANDING THROUGH ESG TECHNOLOGY 20 Dissolvable Pumpdown Rings Used in conjunction with Nine’s composite or dissolvable plugs, by adding a dissolvable pumpdown ring, the bypass around the plug is greatly reduced while maintaining the needed line tension. Using a dissolvable pumpdown ring has been sh
Slide 21: Significant & Scalable Emission Reductions
SIGNIFICANT & SCALABLE EMISSION REDUCTIONS 21 Nine Stinger Dissolvable Frac Plug Dissolvable frac plugs on a 6-well pad take 84 cars off the road: ~404 METRIC TONS OF CO2E Source: ERM; Details and assumptions can be found on Nine’s website at: nineenergyservice.com/assets/files/Environmental-Study-R
Slide 22: Cementing & Drilling Solutions
CEMENTING & DRILLING SOLUTIONS 22 Succeed in the Most Complex Formations Deep expertise in North America’s most active shale plays, innovative slurry R&D, modern technology and steadfast service. Cement Slurries BLEND 27 FLEX 50H Builds strength 60% faster 16X more acid resistance and Additives FLOW
Slide 23: Financial Overview
Nine FINANCIAL __ OVERVIEW
Slide 24: Q3 2024 Financial Snapshot
Q3 2024 FINANCIAL SNAPSHOT 24 Q3 Highlights Q3 2024 ($mm) REVENUE Q3 revenue came in above Management’s original guidance and increased by ~4% q/q, despite the $132 $138 average US rig count declining by ~3% Adjusted EBITDA increased by ~47% q/q with incremental adjusted EBITDA margins of ~79% Q2 24
Slide 25: 9/30/2024 Capitalization
9/30/2024 CAPITALIZATION 25 AS OF 9/30/24 ($MM) PRO FORMA CAPITALIZATION Commentary Cash 15.7 YTD capital expenditures through Q3 of $11.7mm Debt 2024 FY Capex guidance of $10mm - ABL Credit Facility 50.0 $15mm, down from previous guidance 2028 Senior Secured Notes 300.0 of $15mm - $25mm Other Debt
Slide 26: Close to Perfection / Far from Ordinary
CLOSE TO PERFECTION ( FAR FROM ORDINARY
Slide 27: Appendix
APPENDIX
Slide 28: Nine Adj. EBITDA Reconciliation
NINE ADJ. EBITDA RECONCILIATION 28 ($ MM UNLESS OTHERWISE NOTED) 30 – Sep 24 30– Jun 24 31– Mar 24 2023 2022 2021 2020 2019 2018 EBITDA Reconciliation Net income (loss) (10.1) (14.0) (8.1) (32.2) 14.4 (64.6) (378.9) (217.8) (53.0) Interest expense 12.9 12.8 12.8 51.1 32.5 32.5 36.8 39.8 22.3 Interes
Slide 29: Adjusted ROIC Reconciliation
ADJUSTED ROIC RECONCILIATION 29 ($ MM UNLESS OTHERWISE NOTED) 30- Sep 24 30– Jun 24 31– Mar 24 2023 2022 After-tax net operating profit reconciliation: Net income (loss) (10.1) (14.0) (8.1) (32.2) 14.4 Add back: Interest expense 12.9 12.8 12.8 51.1 32.5 Interest Income (0.2) (0.2) (0.3) (1.3) (0.3)