Nine Energy Service, Inc. · AMEX:NINE
Nine Energy Service — Investor Presentation (June 2018)
23 slides from Nine Energy Service's investor presentation, June 2018
Slide 1: Nine Energy Service Investor Presentation June 2018
NINE ENERGY SERVICE INVESTOR PRESENTATION JUNE 2018 1
Slide 2: Disclaimer
DISCLAIMER 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 included
Slide 3: Company Overview
COMPANY OVERVIEW
Slide 4: Nine Company Overview
NINE COMPANY OVERVIEW OUR COMPANY • Focused on ROIC – 2018 target of 8% • 100% onshore North America with leverage to increasing completion intensity • Super lateral, deep reach capable service offering and focus • Agnostic to completion style – plug and perf (94%1 of horizontal market) and sleeve c
Slide 5: Technology-Driven Completions Offering
TECHNOLOGY-DRIVEN COMPLETIONS OFFERING Nine is capable of addressing 100% of the onshore wells drilled in North America, regardless of completion type PRE & POST STIMULATION HORIZONTAL LATERAL TOE OF THE WELL Large Diameter Coil + Memory Tools Long-string Cementing Offering includes tools & equipmen
Slide 6: Multi-Well Pads Concentrate Risk
MULTI-WELL PADS CONCENTRATE RISK Barriers to entry continue to increase SINGLE-WELL PAD COMPLETIONS MULTI-WELL PAD COMPLETIONS LONGER LATERALS TIGHTER SPACING PAD DRILLING l l Concentration of dollars / pad + exponential impact of Non-Productive Time = highly selective customers • Total well cost: $
Slide 7: Sustainable Value Proposition of Service & Technology
SUSTAINABLE VALUE PROPOSITION OF SERVICE & TECHNOLOGY Service and technology drives efficiencies and lowers total cost of ownership for operators SERVICE/TECHNOLOGY PERFORMANCE DAYS SAVED REVENUE GENERATION FOR OPERATORS1 Scorpion Composite Plug 122 plugs drilled out ~2.5 days per 6 well pad = $975K
Slide 8: 3-Pronged Strategy to Technology Acquisition
3-PRONGED STRATEGY TO TECHNOLOGY ACQUISITION INTERNAL R&D IP ACQUISITION STRATEGIC ALLIANCES Keep It Simple Deliberate & Careful Distribution Hub • Focus on creating tools that • Used to secure technology that • Requires broad NAM footprint lower operator costs and is prolific in the wellbore and se
Slide 9: Broad Footprint Enables Technology Leadership
BROAD FOOTPRINT ENABLES TECHNOLOGY LEADERSHIP FOOTPRINT IN EVERY MAJOR NAM BASIN – Canada 4% significant benefit to potential strategic partners through distribution volume EXCELLENT NAM REACH Bakken 5% CAPABILITY – proximity to the field, customer Rockies 4% and acreage Marcellus / Utica 19% LOCALI
Slide 10: Barriers to Entry Through Technology and Service
BARRIERS TO ENTRY THROUGH TECHNOLOGY AND SERVICE HOW DOES NINE BUILD MOATS AROUND THE BUSINESS? Service + technology / equipment + people to service the longest laterals today and tomorrow COMPLETION SOLUTIONS PERFORMANCE BARRIERS EQUIPMENT BARRIERS → FIT FOR “DEEP REACH” Cementing Services • ~11,10
Slide 11: Proof of Performance
PROOF OF PERFORMANCE Majority Of Nine’s Completion Work Is Long Laterals Has Led To Increased Efficiencies And Higher Barriers To Entry 8% 60% 48 78% 10.2 85% 5% 27 5.5 2014 2017 2014 2017 2014 2017 2 Nine US Wireline & Completion 1 Nine Avg. Stages Completed Per Well Stages / Employee / Month 2 Too
Slide 12: Customers Who Trust Us
CUSTOMERS WHO TRUST US Diverse customer base with minimal concentration → no individual customer more than 10% of 2017 revenues COMPLETION PRODUCTION 12
Slide 13: Business Managed for Strong Return on Capital
BUSINESS MANAGED FOR STRONG RETURN ON CAPITAL Better OFS returns through cycle dictate a careful blend of capital intensity COMPLETION TOOLS WIRELINE WELL SERVICE CEMENTING COILED TUBING EQUIPMENT, PEOPLE & CAPEX LESS INTENSIVE MORE INTENSIVE 2014 ROIC1 18% 16% 13% 9% 7% 6% 5% 3% 3% 1% Large Cap Nin
Slide 14: Returns-Focused Growth Philosophy
RETURNS-FOCUSED GROWTH PHILOSOPHY Balance of Organic Growth and Strategic M&A: Augment technology portfolio + Enhance NAM footprint ORGANIC GROWTH DISCIPLINED M&A • Strategic expansion of existing service lines within NAM • Continue to consolidate highly fragmented industry basins • Target only best
Slide 15: Financial Overview
FINANCIAL OVERVIEW 15
Slide 16: 2017 Financial Performance
2017 FINANCIAL PERFORMANCE REVENUE 2017 OPERATIONAL PERFORMANCE ($ in millions) • Completion Solutions – revenue increased by $544 approximately 110% year over year Q4 17 − Cementing jobs for 2017 increased approximately 75% over 2016. The average blended revenue per job for the full year 2017 incre
Slide 17: Q1 2018 Financial Snapshot
Q1 2018 FINANCIAL SNAPSHOT Q1 2018 FINANCIAL & OPERATIONAL PERFORMANCE 13% Revenue growth q/q • Revenue growth driven by Completion Solutions, which grew 15% quarter over quarter without any new equipment added Activity levels have continued to strengthen seen through Nine’s REVENUE • $174 utilizati
Slide 18: Balance Sheet & Liquidity Position
BALANCE SHEET & LIQUIDITY POSITION PRO FORMA CAPITALIZATION COMMENTARY As of March 31, 2018 • Nine has a total liquidity position of ($MM) $122.3mm as of 3/31/18 Cash $72.9 • Nine will be disciplined with capital deployment, with a ROIC-focused philosophy Debt New Revolving Credit Borrowings 0.0 New
Slide 19: Unique Value Proposition for Investors
UNIQUE VALUE PROPOSITION FOR INVESTORS 19
Slide 20: Close to Perfection. Far from Ordinary. Driven to Succeed.
CLOSE TO PERFECTION. FAR FROM ORDINARY. DRIVEN TO SUCCEED.
Slide 21: Appendix
APPENDIX
Slide 22: EBITDA and Adj. EBITDA Reconciliation
EBITDA AND ADJ. EBITDA RECONCILIATION Three Months Six months Six months Ended Three months ended Year ended December 31 ended ended June 30, December ($ mm unless otherwise noted) 31-Mar-18 31-Dec-17 30-Sep-17 30-Jun-17 31-Mar-17 2017 2016 2015 2014 20141 31, 20141 EBITDA Reconciliation Net income
Slide 23: ROIC Reconciliation
ROIC RECONCILIATION Three Months Ended Year Ended December 31 ($ MM UNLESS OTHERWISE NOTED) 31-Mar-18 2014 After-tax net operating profit reconciliation: Income (loss from continuing operations net of tax) $1.7 $76.2 Add back: Interest expense 2.9 9.6 Exclude: Taxes on interest (0.6) (3.5) After-tax
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