Nine Energy Service, Inc. Q2 FY2024 earnings call

• Revenue for Q2 was $132.4 million, within original guidance of $130M - $140M. Adjusted EBITDA $9.7M, diluted EPS -$0.40. - Rig declines since end of 2022 led to over 200 rig declines, impacting revenue and earnings. - Cementing revenue down due to activity and pricing; completion tools down due to reduced sales and international factors. - U.S. refrac business strong with over 300 jobs run, seen as an important niche market. - Dissolvable and composite plugs performing well; coil tubing down due to white space and activity declines. - Wireline flat QoQ, differentiated through superior well site execution and service.

Revenue for the quarter was $132.4 million. Cementing revenue was $45.8 million, a decrease of approximately 5% (completed 926 jobs, down ~2% with average blended revenue per job down ~3%). Completion tool revenue was $32.4 million, a decrease of approximately 8% (completed 23,862 stages, down ~10%). U.S. refrac business had over 300 jobs run, an important niche market. Coiled tubing revenue was $26.2 million, a decrease of approximately 15% (days worked down ~23%, utilization 49%). Wireline revenue was $28 million, flat QoQ (completed 6,353 stages, down ~2% with average blended revenue per stage up ~2%). Nine's exposure to the gas market is approximately 30% to 35% of revenue.

• Anticipates Q3 revenue between $127 million and $137 million, relatively flat vs Q2. - Adjusted EBITDA and margin expected to be relatively flat. - Asset-light business model allows quick market shifts; confident in medium- to long-term gas market outlook with power demand in U.S. projected to increase.

• Volatility in U.S. land rig count impacting revenue and earnings. - Commodity price fluctuations affecting pricing and margins. - International tools business lumpy quarter-over-quarter.

Q: What service lines are being positively impacted by the refracs?

A: All service lines from completion tools, cementing, wireline, and coiled tubing are positively impacted as they provide a holistic solution in refracs. Anticipate significant growth in the refrac market next year and own a lion's share of the current market.

Q: Why is there confidence in relatively flat revenues and profitability in Q3 versus Q2 despite lower rig count?

A: Refrac business is filling the gap. Also, good traction in cementing business closing white space, moving assets to West Texas successfully, and remedial markets in natural gas storage helping. July came in stronger than anticipated.

Q: Ballpark estimate of refrac jobs in Eagle Ford and Bakken?

A: Vast majority of the 300 refrac jobs are in Eagle Ford and Bakken due to Tier 1 acreage with good economics and understimulated well sites.

Q: Thoughts on gas market outlook and ramping activity?

A: Gas prices won't stay flat. Confident in medium- to long-term outlook as natural gas is a key source for U.S. power demand. Team has experience surviving tough markets and will be ready to ramp if activity increases.