Nine Energy Service Announces First Quarter 2025 Results

About this update from Nine Mile Metals Ltd.

.bwalignc { text-align: center; list-style-position: inside } .bwalignl { text-align: left } .bwalignr { text-align: right; list-style-position: inside } .bwblockalignl { margin-left: 0px; margin-right: auto } .bwcellpmargin { margin-bottom: 0px; margin-top: 0px } .bwdoublebottom { border-bottom: double black 2.25pt } .bwlistdisc { list-style-type: disc } .bwpadb3 { padding-bottom: 4px } .bwpadb4 { padding-bottom: 5px } .bwpadl0 { padding-left: 0px } .bwpadl2 { padding-left: 10px } .bwpadl3 { padding-left: 15px } .bwpadl6 { padding-left: 30px } .bwpadl9 { padding-left: 45px } .bwpadr0 { padding-right: 0px } .bwsinglebottom { border-bottom: solid black 1pt } .bwtablemarginb { margin-bottom: 10px } .bwvertalignb { vertical-align: bottom } .bwvertalignt { vertical-align: top } .bwwidth1 { width: 1% } .bwwidth10 { width: 10% } .bwwidth100 { width: 100% } .bwwidth11 { width: 11% } .bwwidth12 { width: 12% } .bwwidth14 { width: 14% } .bwwidth2 { width: 2% } .bwwidth3 { width: 3% } .bwwidth60 { width: 60% } .bwwidth69 { width: 69% } .bwwidth7 { width: 7% } .bwwidth73 { width: 73% } .bwwidth76 { width: 76% } .bwwidth77 { width: 77% } .bwwidth84 { width: 84% } Increased revenue ~6% quarter over quarter, despite the average Q1 US rig count remaining flat Sequential quarterly net loss improved and decreased by ~20% for the first quarter of 2025 Sequential quarterly adjusted EBITDA A increased by ~17% for the first quarter of 2025 Revenue, net loss and adjusted EBITDA of $150.5 million, $(7.1) million and $16.5 million, respectively, for the first quarter of 2025 Total liquidity as of March 31, 2025 of $53.8 million On May 1, 2025, closed on a new $125 million senior secured ABL revolving credit facility Nine Energy Service, Inc. ("Nine" or the "Company") (NYSE: NINE) reported first quarter 2025 revenues of $150.5 million, net loss of $(7.1) million, or $(0.18) per diluted share and $(0.18) per basic share, and adjusted EBITDA of $16.5 million. The Company had provided original first quarter 2025 revenue guidance between $146.0 and $152.0 million, with actual results in the upper end of the provided range. “Despite the average US rig count remaining flat quarter over quarter, we increased our revenue by approximately 6%, with revenue coming in the upper end of the originally provided guidance,” said Ann Fox, President and Chief Executive Officer, Nine Energy Service. “We had a strong quarter relative to the market as we continued to execute our strategy of market share gains and cost reductions. Despite a flat US rig count in Q1, we were able to grow revenue and profitability, which were driven once again by activity increases in cementing, where we increased revenue quarter over quarter by approximately 4%. Additionally, we did not have the negative impacts of holiday, weather and budget exhaustion we saw in Q4, resulting in more efficient operations and less white space. This was most evident in our coiled tubing division where we were able to increase revenue by approximately 16% quarter over quarter. I am extremely proud of our team’s ability to simultaneously grow revenue and reduce costs, enabling us to organically increase profitability.” “We recently closed on our new $125 million asset-based revolving credit facility which immediately improves our liquidity and extended our revolving credit maturity. This new facility increases our financial flexibility, and we are confident that it will help drive value for the Company and our shareholders moving forward.” “The recent decline in oil prices, in conjunction with increased costs due to tariffs, has created uncertainty for the energy industry and the timing and totality of these impacts are still unknown. We have begun to see some activity declines, as well as pricing pressure, specifically in the Permian Basin following the decline in oil prices. Things can change quickly, but with what we know today, we anticipate Q2 revenue and earnings will be down compared to Q1.” “This team has navigated uncertainty before, and we are prepared to pivot with market changes. We are ready to capitalize on any potential market growth in the natural gas levered basins, and our diversity in geography and commodities remain an important differentiator for Nine. We will continue to focus on executing our strategy, the development of our technology and maintaining excellent service quality and execution at the wellsite.” Operating Results During the first quarter of 2025, the Company reported revenues of $150.5 million, gross profit of $19.5 million and adjusted gross profit B of $28.0 million. During the first quarter, the Company generated ROIC of (10.9)% and adjusted ROIC C of 8.8%. During the first quarter of 2025, the Company reported general and administrative (“G&A”) expense of $13.3 million. Depreciation and amortization expense ("D&A") in the first quarter of 2025 was $8.6 million. The Company’s tax provision was approximately $0.1 million for the first quarter of 2025. The provision for 2025 is the result of the Company’s tax position in state and non-U.S. tax jurisdictions. Liquidity and Capital Expenditures During the first quarter of 2025, the Company reported net cash used in operating activities of $(5.3) million. Capital expenditures totaled $4.3 million during the first quarter of 2025. The Company’s full-year 2025 capex guidance is unchanged at $15 to $25 million. As of March 31, 2025, Nine’s cash and cash equivalents were $17.3 million, and the Company had $36.5 million of availability under the revolving credit facility, resulting in a total liquidity position of $53.8 million as of March 31, 2025. On March 31, 2025, the Company had $47.0 million of borrowings under the revolving credit facility. On May 1, 2025, the Company closed on a new revolving credit facility with White Oak Commercial Finance. The new credit agreement provides for an asset-based revolving credit facility with lender commitments of $125 million (the “maximum revolving facility amount”) and an uncommitted accordion of up to $50 million. Borrowings under the new revolving credit facility will mature on the earlier of (i) May 1, 2028 and (ii) the date that is 91 days prior to the maturity date of the Company’s senior secured notes. The outstanding balance of the borrowings under the new revolving credit facility may not exceed in the aggregate at any time the lesser of (i) the maximum revolving facility amount reduced by certain customary reserves and (ii) the borrowing base, which is calculated on the basis of eligible accounts and inventory. The new revolving credit facility refinanced and replaced the Company’s previous revolving credit facility, which would have matured in January 2027. A summary of the terms of the new revolving credit facility are contained within the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 7, 2025, and a supplemental presentation relating to the new revolving credit facility can be found on the Investor Relations section of the Company’s website. As per the terms of the indenture governing Nine’s senior secured notes, the Company is required to periodically offer to repurchase such notes with a portion of any Excess Cash Flow, as defined in the indenture. Nine did not generate any Excess Cash Flow in the most recently ended two fiscal quarters (the six-month period ended March 31, 2025). As a result, no Excess Cash Flow offer will be made to noteholders this month. During the first quarter of 2025, the Company did not sell any shares of common stock under its at-the-market equity offering program. ABC See end of press release for definitions of these non-GAAP measures. These measures are intended to provide additional information only and should not be considered as alternatives to, or more meaningful than, net income (loss), gross profit or any other measure determined in accordance with GAAP. Certain items excluded from these measures are significant components in understanding and assessing a company’s financial performance, such as a company’s cost of capital and tax structure, as well as the historic costs of depreciable assets. Our computation of these measures may not be comparable to other similarly titled measures of other companies. Conference Call Information The call is scheduled for Thursday, May 8, 2025, at 9:00 am Central Time. Participants may join the live conference call by dialing U.S. (Toll Free): (877) 524-8416 or International: (412) 902-1028 and asking for the “Nine Energy Service Earnings Call”. Participants are encouraged to dial into the conference call ten to fifteen minutes before the scheduled start time to avoid any delays entering the earnings call. For those who cannot listen to the live call, a telephonic replay of the call will be available through May 22, 2025 and may be accessed by dialing U.S. (Toll Free): (877) 660-6853 or International: (201) 612-7415 and entering the passcode of 13751414. About Nine Energy Service Nine Energy Service is an oilfield services company that offers completion solutions within North America and abroad. The Company brings years of experience with a deep commitment to serving clients with smarter, customized solutions and world-class resources that drive efficiencies. Serving the global oil and gas industry, Nine continues to differentiate itself through superior service quality, wellsite execution and cutting-edge technology. Nine is headquartered in Houston, Texas with operating facilities in the Permian, Eagle Ford, Haynesville, SCOOP/STACK, Niobrara, Barnett, Bakken, Marcellus, Utica and Canada. For more information on the Company, please visit Nine’s website at nineenergyservice.com . Forward Looking Statements The foregoing contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are those that do not state historical facts and are, therefore, inherently subject to risks and uncertainties. Forward-looking statements also include statements that refer to or are based on projections, uncertain events or assumptions. The forward-looking statements included herein are based on current expectations and entail various risks and uncertainties that could cause actual results to differ materially from those forward-looking statements. Such risks and uncertainties include, among other things, the level of capital spending and well completions by the onshore oil and natural gas industry, which may be affected by geopolitical and economic developments in the U.S. and globally, including conflicts, instability, acts of war or terrorism in oil producing countries or regions, particularly Russia, the Middle East, South America and Africa, as well as actions by members of the Organization of the Petroleum Exporting Countries and other oil exporting nations; general economic conditions and inflation, particularly, cost inflation with labor or materials; the effects of tariffs and other trade measures on the Company’s business and on the onshore oil and natural gas industry generally; equipment and supply chain constraints; the Company’s ability to attract and retain key employees, technical personnel and other skilled and qualified workers; the Company’s ability to maintain existing prices or implement price increases on our products and services; pricing pressures, reduced sales, or reduced market share as a result of intense competition in the markets for the Company’s dissolvable plug products; conditions inherent in the oilfield services industry, such as equipment defects, liabilities arising from accidents or damage involving our fleet of trucks or other equipment, explosions and uncontrollable flows of gas or well fluids, and loss of well control; the Company’s ability to implement and commercialize new technologies, services and tools; the Company’s ability to grow its completion tool business domestically and internationally; the adequacy of the Company’s capital resources and liquidity, including the ability to meet its debt obligations; the Company’s ability to manage capital expenditures; the Company’s ability to accurately predict customer demand, including that of its international customers; the loss of, or interruption or delay in operations by, one or more significant customers, including certain of the Company’s customers outside of the United States; the loss of or interruption in operations of one or more key suppliers; the incurrence of significant costs and liabilities resulting from litigation; cybersecurity risks; changes in laws or regulations regarding issues of health, safety and protection of the environment; and other factors described in the “Risk Factors” and “Business” sections of the Company’s most recently filed Annual Report on Form 10-K and subsequently filed Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof, and, except as required by law, the Company undertakes no obligation to update those statements or to publicly announce the results of any revisions to any of those statements to reflect future events or developments. NINE ENERGY SERVICE, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) (In Thousands, Except Share and Per Share Amounts) (Unaudited) Three Months Ended March 31, 2025 December 31, 2024 Revenues $ 150,466 $ 141,426 Cost and expenses Cost of revenues (exclusive of depreciation and amortization shown separately below) 122,470 115,224 General and administrative expenses 13,263 14,185 Depreciation 5,837 6,032 Amortization of intangibles 2,796 2,795 Loss (gain) on revaluation of contingent liability 25 (87 ) Loss (gain) on sale of property and equipment 446 (229 ) Income from operations 5,629 3,506 Interest expense 12,876 12,868 Interest income (139 ) (189 ) Other income (162 ) (162 ) Loss before income taxes (6,946 ) (9,011 ) Provision (benefit) for income taxes 115 (168 ) Net loss $ (7,061 ) $ (8,843 ) Loss per share Basic $ (0.18 ) $ (0.22 ) Diluted $ (0.18 ) $ (0.22 ) Weighted average shares outstanding Basic 40,164,443 40,104,614 Diluted 40,164,443 40,104,614 Other comprehensive loss (income), net of tax Foreign currency translation adjustments, net of tax of $0 and $0 $ 262 $ (381 ) Total other comprehensive income (loss), net of tax 262 (381 ) Total comprehensive loss $ (6,799 ) $ (9,224 ) NINE ENERGY SERVICE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In Thousands) (Unaudited) March 31, 2025 December 31, 2024 Assets Current assets Cash and cash equivalents $ 17,275 $ 27,880 Accounts receivable, net 95,115 81,157 Income taxes receivable 185 284 Inventories, net 51,186 50,781 Prepaid expenses 9,159 9,982 Other current assets 1,657 380 Total current assets 174,577 170,464 Property and equipment, net 68,562 70,518 Operating lease right of use assets, net 37,064 37,252 Finance lease right of use assets, net 50 29 Intangible assets, net 76,450 79,246 Other long-term assets 2,478 2,567 Total assets $ 359,181 $ 360,076 Liabilities and Stockholders’ Equity (Deficit) Current liabilities Accounts payable $ 46,493 $ 36,052 Accrued expenses 25,156 30,676 Current portion of long-term debt 2,260 3,580 Current portion of operating lease obligations 12,086 11,216 Current portion of finance lease obligations 34 21 Total current liabilities 86,029 81,545 Long-term liabilities Long-term debt 319,137 317,264 Long-term operating lease obligations 25,588 26,710 Other long-term liabilities 540 621 Total liabilities 431,294 426,140 Stockholders’ equity (deficit) Common stock (120,000,000 shares authorized at $.01 par value; 42,348,643 and 42,348,643 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively) 423 423 Additional paid-in capital 806,981 806,231 Accumulated other comprehensive loss (5,144 ) (5,406 ) Accumulated deficit (874,373 ) (867,312 ) Total stockholders’ equity (deficit) (72,113 ) (66,064 ) Total liabilities and stockholders’ equity (deficit) $ 359,181 $ 360,076 NINE ENERGY SERVICE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands) (Unaudited) Three Months Ended March 31, 2025 December 31, 2024 Cash flows from operating activities Net loss $ (7,061 ) $ (8,843 ) Adjustments to reconcile net loss to net cash (used in) provided by operating activities Depreciation 5,837 6,032 Amortization of intangibles 2,796 2,795 Amortization of deferred financing costs 2,087 2,010 Amortization of operating leases 3,418 3,308 Provision for doubtful accounts 34 69 Provision for inventory obsolescence 611 751 Stock-based compensation expense 750 721 Loss (gain) on sale of property and equipment 446 (229 ) Loss (gain) on revaluation of contingent liability 25 (87 ) Changes in operating assets and liabilities, net of effects from acquisitions Accounts receivable, net (13,967 ) (1,527 ) Inventories, net (928 ) 4,106 Prepaid expenses and other current assets (448 ) (4,580 ) Accounts payable and accrued expenses 4,699 13,869 Income taxes receivable/payable 98 336 Operating lease obligations (3,372 ) (3,267 ) Other assets and liabilities (302 ) (476 ) Net cash (used in) provided by operating activities (5,277 ) 14,988 Cash flows from investing activities Proceeds from sales of property and equipment - 233 Purchases of property and equipment (3,981 ) (3,235 ) Net cash used in investing activities (3,981 ) (3,002 ) Cash flows from financing activities Proceeds from revolving credit facility 4,000 Payments on revolving credit facility (4,000 ) (3,000 ) Proceeds from short-term debt - 5,762 Payments of short-term debt (1,320 ) (2,182 ) Principal payments on finance leases (13 ) (9 ) Payments of contingent liability (223 ) (138 ) Net cash (used in) provided by financing activities (1,556 ) 433 Impact of foreign currency exchange on cash 209 (191 ) Net (decrease) increase in cash and cash equivalents (10,605 ) 12,228 Cash and cash equivalents Beginning of period 27,880 15,652 End of period $ 17,275 $ 27,880 NINE ENERGY SERVICE, INC. RECONCILIATION OF ADJUSTED EBITDA (In Thousands) (Unaudited) Three Months Ended March 31, 2025 December 31, 2024 Net loss $ (7,061 ) $ (8,843 ) Interest expense 12,876 12,868 Interest income (139 ) (189 ) Depreciation 5,837 6,032 Amortization of intangibles 2,796 2,795 Provision (benefit) for income taxes 115 (168 ) EBITDA $ 14,424 $ 12,495 Loss (gain) on revaluation of contingent liability (1) 25 (87 ) Restructuring charges - 182 Stock-based compensation 750 721 Cash award expense 892 1,067 Loss (gain) on sale of property and equipment 446 (229 ) Adjusted EBITDA $ 16,537 $ 14,149 (1) Amounts relate to the revaluation of contingent liability associated with a 2018 acquisition. NINE ENERGY SERVICE, INC. RECONCILIATION AND CALCULATION OF ADJUSTED ROIC (In Thousands) (Unaudited) Three Months Ended March 31, 2025 December 31, 2024 Net loss $ (7,061 ) $ (8,843 ) Add back: Interest expense 12,876 12,868 Interest income (139 ) (189 ) Restructuring charges - 182 Adjusted after-tax net operating income $ 5,676 $ 4,018 Total capital as of prior period-end: Total stockholders' deficit $ (66,064 ) $ (57,561 ) Total debt 350,580 350,000 Less: cash and cash equivalents (27,880 ) (15,652 ) Total capital as of prior period-end: $ 256,636 $ 276,787 Total capital as of period-end: Total stockholders' deficit $ (72,113 ) $ (66,064 ) Total debt 349,260 350,580 Less: cash and cash equivalents (17,275 ) (27,880 ) Total capital as of period-end: $ 259,872 $ 256,636 Average total capital $ 258,254 $ 266,712 ROIC -10.9 % -13.3 % Adjusted ROIC 8.8 % 6.0 % NINE ENERGY SERVICE, INC. RECONCILIATION OF ADJUSTED GROSS PROFIT (LOSS) (In Thousands) (Unaudited) Three Months Ended March 31, 2025 December 31, 2024 Calculation of gross profit: Revenues $ 150,466 $ 141,426 Cost of revenues (exclusive of depreciation and amortization shown separately below) 122,470 115,224 Depreciation (related to cost of revenues) 5,723 6,902 Amortization of intangibles 2,796 2,795 Gross profit $ 19,477 $ 16,505 Adjusted gross profit reconciliation: Gross profit $ 19,477 $ 16,505 Depreciation (related to cost of revenues) 5,723 6,902 Amortization of intangibles 2,796 2,795 Adjusted gross profit $ 27,996 $ 26,202 NINE ENERGY SERVICE, INC. EXCESS CASH FLOW CALCULATION (In Thousands) (Unaudited) March 31, 2025 Net cash provided by operating activities (1) $ 9,711 Repurchases of common stock in connection with stock-based employee compensation - Capital expenditures used or useful in a Permitted Business: Purchases of property and equipment (7,216 ) Proceeds from sales of property and equipment 233 Repayments of ABL Obligations 1,139 Charges in respect of finance lease obligations (22 ) Debt issuance costs - Payments on short-term debt (3,502 ) Impact of foreign exchange rate on cash 18 Contingent liability payments (361 ) Excess Cash Flow $ - Excess Cash Flow % 75 % Excess Cash Flow Amount $ - (1) Amount consists of the Company's consolidated operating cash flow, determined in accordance with GAAP, for the fiscal quarter ended December 31, 2024 ($15.0 million of net cash provided by operating activities) and for the fiscal quarter ended March 31, 2025 ($5.3 million of net cash used in operating activities) See the definition of Excess Cash Flow included in the Indenture filed as Exhibit 4.2 to the Current Report on Form 8-K filed February 1, 2023. A Adjusted EBITDA is defined as EBITDA (which is net income (loss) before interest, taxes, and depreciation and amortization) further adjusted for (i) goodwill, intangible asset, and/or property and equipment impairment charges, (ii) transaction and integration costs related to acquisitions, (iii) loss or gain on revaluation of contingent liabilities, (iv) loss or gain on the extinguishment of debt, (v) loss or gain on the sale of subsidiaries, (vi) restructuring charges, (vii) stock-based compensation and cash award expense, (viii) loss or gain on sale of property and equipment, and (ix) other expenses or charges to exclude certain items which we believe are not reflective of ongoing performance of our business, such as legal expenses and settlement costs related to litigation outside the ordinary course of business. Management believes adjusted EBITDA provides useful information to us and our investors regarding our financial condition and results of operations because it allows us and them to more effectively evaluate our operating performance and compare the results of our operations from period to period without regard to our financing methods or capital structure and helps identify underlying trends in our operations that could otherwise be distorted by the effect of impairments, acquisitions and dispositions and costs that are not reflective of the ongoing performance of our business. B Adjusted gross profit (loss) is defined as revenues less cost of revenues excluding depreciation and amortization. This measure differs from the GAAP definition of gross profit (loss) because we do not include the impact of depreciation and amortization, which represent non-cash expenses. Our management believes adjusted gross profit (loss) provides useful information to us and our investors regarding our financial condition and results of operation and helps management evaluate our operating performance by eliminating the impact of depreciation and amortization, which we do not consider indicative of our core operating performance. C Adjusted return on invested capital (“adjusted ROIC”) is defined as adjusted after-tax net operating profit (loss), divided by average total capital. We define adjusted after-tax net operating profit (loss), which is a non-GAAP measure, as net income (loss) plus (i) goodwill, intangible asset, and/or property and equipment impairment charges, (ii) transaction and integration costs related to acquisitions, (iii) interest expense (income), (iv) restructuring charges, (v) loss (gain) on the sale of subsidiaries, (vi) loss (gain) on extinguishment of debt, and (vii) the provision (benefit) for deferred income taxes. We define total capital as book value of equity (deficit) plus the book value of debt less balance sheet cash and cash equivalents. We compute and use the average of the current and prior period-end total capital in determining adjusted ROIC. Management believes adjusted ROIC provides useful information to us and our investors regarding our financial condition and results of operations because it quantifies how well we generate operating income relative to the capital we have invested in our business and illustrates the profitability of a business or project taking into account the capital invested, and management uses adjusted ROIC to assist them in capital resource allocation decisions and in evaluating business performance. View source version on businesswire.com: https://www.businesswire.com/news/home/20250507375505/en/ Nine Energy Service Investor Contact: Heather Schmidt Senior Vice President, Strategic Development and Investor Relations (281) 730-5113 [email protected]

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