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NE

Nine Energy Service, Inc. (NINE)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 revenue was $141.4M (+~2% q/q) with adjusted EBITDA of $14.1M (flat q/q) and diluted EPS of $(0.22); results landed at the upper end of prior Q4 guidance ($132–$142M), supported by cementing and completion tools strength despite typical seasonality .
  • Segment mix: cementing revenue rose ~7% q/q on jobs +12%, completion tools revenue +~6% q/q; wireline revenue -~1% and coiled tubing revenue -~7% as days worked fell ~16% but day rates increased ~11% .
  • Liquidity ended Q4 at $52.1M (cash $27.9M; revolver availability $24.2M; $47.0M revolver borrowings); ATM program sold ~5.4M shares in 2024 for ~$8.2M net proceeds .
  • Management guided Q1 2025 revenue to $146–$152M and expects sequential increases in revenue and adjusted EBITDA, citing sustained market-share gains and cost reductions, with a supportive natural gas backdrop (>30% revenue levered to gas basins) .
  • Strategic refresh: Board reduced to six and added AI-experienced CFO Julie Peffer (BigBear.ai) and energy CFO/CEO Richard Burnett, a potential catalyst for technology focus and governance; management unchanged .

What Went Well and What Went Wrong

What Went Well

  • Cementing market share gains and execution: “We exited 2024 with a Q4 cementing market share within the regions we operate of approximately 19%, an increase of approximately 14% over our Q4 2023 market share,” with quarterly cementing revenue up ~20% from Q2 to Q4 .
  • Completion tools innovation and speed: New Pincer hybrid frac plug and frac start element; drill-out times “as low as 2 minutes per plug,” and bullish on dissolvable plugs for longer laterals .
  • Safety and sustainability progress: TRIR fell ~22% YoY to 0.49; first Sustainability Report published .

What Went Wrong

  • Profitability headwinds in certain lines: Coiled tubing days worked -~16% q/q, utilization 44%, revenue -~7%; wireline revenue per stage -~7% and revenue -~1% q/q .
  • Continued net loss and high interest burden: Q4 net loss $(8.8)M with Q4 interest expense ~$12.9M; FY net loss $(41.1)M despite cost-cutting .
  • Macro/market constraints: Depressed 2024 natural gas prices (~$2.19 average) pressured activity and pricing in gas-levered basins; management noted rig count declines and spot-market sensitivity .

Financial Results

Quarterly Performance (Q2 → Q4 2024)

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$132.401 $138.157 $141.426
Net Loss ($USD Millions)$(14.041) $(10.143) $(8.843)
Diluted EPS ($USD)$(0.40) $(0.26) $(0.22)
Adjusted EBITDA ($USD Millions)$9.735 $14.286 $14.149
Gross Profit ($USD Millions)$11.418 $16.119 $16.505
Adjusted Gross Profit ($USD Millions)$20.353 $24.706 $26.202
Gross Margin % (calc)8.6% (11.418/132.401) 11.7% (16.119/138.157) 11.7% (16.505/141.426)
Adj. EBITDA Margin % (calc)7.4% (9.735/132.401) 10.3% (14.286/138.157) 10.0% (14.149/141.426)

Full-Year Comparison

MetricFY 2023FY 2024
Revenue ($USD Millions)$609.526 $554.104
Net Loss ($USD Millions)$(32.213) $(41.082)
Adjusted EBITDA ($USD Millions)$72.966 $53.204
Gross Profit ($USD Millions)$80.159 $61.097
Adjusted Gross Profit ($USD Millions)$118.776 $97.375

Segment Breakdown (Q4 2024)

SegmentRevenue ($USD Millions)VolumeQoQ Change Commentary
Cementing$54.8 1,121 jobs Jobs +~12%; revenue +~7%; avg revenue/job -~4%
Wireline$27.6 6,713 stages Stages +~6%; avg revenue/stage -~7%; revenue -~1%
Completion Tools$33.3 25,587 stages Stages +~3%; revenue +~6%
Coiled Tubing$25.8 44% utilization Days worked -~16%; avg day rate +~11%

Liquidity and Capital

Metric (As of period-end)Q3 2024Q4 2024
Cash ($USD Millions)$15.7 $27.9
Revolver Availability ($USD Millions)$27.6 $24.2
Total Liquidity ($USD Millions)$43.3 $52.1
Revolver Borrowings ($USD Millions)$50.0 $47.0
2024 CapEx ($USD Millions)N/A~$14.6
ATM Shares Sold (2024)~5.4M; ~$8.2M proceeds ~5.4M; ~$8.2M proceeds

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ4 2024$132–$142M Actual $141.4M Met (upper end)
RevenueQ1 2025N/A$146–$152M; sequential increase in revenue and adjusted EBITDA New
Total CapExFY 2025N/A$15–$25M New
Adjusted EBITDAQ1 2025N/ASequential increase expected (no margin guidance) Commentary
Tax RateFY 2024~ $0.2M provision (state and non-U.S.) N/A for 2025N/A

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q4 2024)Trend
AI/power demand as gas driverNot explicitly cited; focus on asset-light model and gas markets medium/long-term outlook “Long-term demand for natural gas will increase due to the power demand from AI… our revenue is over 30% levered to natural gas basins” Increasing emphasis
Supply chain tariffsNo prior mention in Q2/Q3 PRs Potential tariff impacts (steel, cement); intent to pass-through costs; sector tightness supports pass-through Emerging risk
Completion tools techQ2: refrac milestone >300 jobs; int’l tools lumpy New hybrid Pincer plug; frac start element; new R&D/testing facility in Texas Intensifying innovation
Cementing market shareQ3: advanced slurries, cementing revenue +12% q/q Market share ~19% in regions (+~14% vs Q4’23), Permian long lateral success with NineLite slurry Strengthening
International toolsQ2: lumpy, strategic focus Expect YoY growth in 2025; multicycle barrier valve competitive Growing
Macro/gas basinsQ2/Q3: gas price challenges depressed activity Supportive 2025 gas price; expect Appalachia first, Haynesville to follow; Q2 timing for activity uptick Improving outlook

Management Commentary

  • “We began to see the impacts of [market share and cost-cutting] strategy in Q3, which continued into Q4 with sequential revenue increases despite a flat average US rig count and typical Q4 seasonality impacts.”
  • “We remain bullish on the dissolvable plug thesis… Technology innovation will continue to be a key focus in 2025 with the introduction of a new, state-of-the-art R&D and completion tools testing facility.”
  • “Because of this, we anticipate both revenue and adjusted EBITDA will increase sequentially in Q1… and we project Q1 revenue between $146 million and $152 million.”
  • “Our revenue is over 30% levered to natural gas basins… [and] we are cautiously optimistic that some of the natural gas levered operators could bring some activity back online.”

Q&A Highlights

  • Dissolvable plug adoption: higher adoption in “hot” gas-heavy basins (Haynesville, Eagle Ford); longer laterals make dissolvables an “insurance policy,” with larger operators’ planned CapEx supportive .
  • Tariffs and pass-throughs: Potential cost impacts (steel, cement); service sector plans to pass through to upstream; sector tightness and lean profitability make pass-through likely .
  • Q1 segment drivers: Cementing primary driver; tools follow as gas markets lift; coiled tubing utilization rebalancing .
  • International tools: Lumpy cadence; expecting YoY growth in 2025 .
  • Macro sensitivities: Natural gas activity likely improves in Q2 and beyond (Appalachia first, then Haynesville); Permian activity resilient at ~$65 WTI but would weaken in sustained $50s .

Estimates Context

  • S&P Global consensus estimates for Q4 2024 EPS, revenue, and EBITDA were unavailable at time of retrieval due to request limits; therefore, we cannot benchmark results versus Wall Street consensus at this time. We anchor to company guidance and actuals instead [GetEstimates error].
  • Company delivered Q4 revenue at the upper end of its $132–$142M guidance range; management guides Q1 2025 revenue to $146–$152M with sequential EBITDA increase expected .

Key Takeaways for Investors

  • Sequential improvement and mix: Q4 revenue +~2% q/q with adjusted EBITDA ~flat; cementing and tools led while coils and wireline lagged—market share gains and cost actions offset seasonal headwinds .
  • Q1 acceleration signal: Revenue guided +~3–7% q/q to $146–$152M; adjusted EBITDA to rise sequentially as share gains and cost reductions sustain—near-term positive setup .
  • Natural gas tailwind: With >30% revenue levered to gas basins, a supportive 2025 strip and potential Appalachia/Haynesville activity increases could drive upside in tools and cementing volumes .
  • Tariff risk manageable: Input-cost risks (steel, cement) flagged, but management expects sector-wide pass-throughs—monitor timing/magnitude and customer receptivity .
  • Balance sheet and cash costs: Liquidity $52.1M and revolver borrowings $47.0M; semiannual interest payments of ~$20M in Q1 and Q3 will pressure cash flows—watch working capital and margin execution .
  • Strategic governance upgrade: Board downsized and refreshed with AI and upstream expertise; no changes to management—supports technology and operational focus into 2025 .
  • Trend trajectory: Cementing share gains, international tools expansion, and cost discipline are core drivers; if gas activity lifts in Q2+, narrative could shift to margin expansion and volume recovery across gas basins .