Nine Energy Service’s Earnings Call: Mixed Results and Optimistic Outlook

Nine Energy Service ((NINE)) has held its Q4 earnings call. Read on for the main highlights of the call.

Nine Energy Service’s recent earnings call painted a mixed picture, highlighting significant achievements alongside notable challenges. The company reported substantial revenue growth in its Cementing division, innovations in product lines, and effective cost-cutting measures. However, these positive developments were tempered by a net loss for the year, impacts from low natural gas prices, and a decline in rig count. Despite these hurdles, Nine Energy Service remains optimistic about future opportunities, particularly in natural gas demand and international markets.

Cementing Division Growth

The Cementing division emerged as a key driver of Nine Energy Service’s revenue and profitability gains, with revenue increasing by approximately 20% from Q2 to Q4 of 2024. This growth was accompanied by a 14% increase in market share over Q4 2023, underscoring the division’s pivotal role in the company’s financial performance.

Innovative Product Developments

Nine Energy Service introduced several innovative products, including the Pincer hybrid frac plug and an enhanced Scorpion Plug with a frac start element. The Stinger dissolvable plug is also expected to support longer lateral lengths without compromising reliability, showcasing the company’s commitment to advancing its product offerings.

Cost-Cutting and Efficiency Measures

The company implemented strategic cost-cutting measures and achieved market share gains across various service lines and basins. These efforts resulted in increased profitability, even amidst a declining rig count environment, highlighting Nine Energy Service’s focus on operational efficiency.

Sustainability and Safety Achievements

In 2024, Nine Energy Service launched its first sustainability report and achieved a 22% decline in Total Recordable Incident Rate (TRIR) from 2023. These achievements reflect the company’s dedication to sustainability and safety in its operations.

Net Loss for the Year

Despite various successes, Nine Energy Service reported a net loss of $41.1 million for 2024, translating to a negative $1.11 per diluted share. This financial setback underscores the challenges faced by the company in the current market environment.

Challenges from Low Natural Gas Prices

Low natural gas prices, averaging around $2.19 for the year, led to reduced activity levels and pricing pressure, particularly affecting gas-levered basins where Nine Energy Service generates over 30% of its total revenue.

Impact of Rig Count Decline

The U.S. rig count declined by almost 25% over the last two years, with a decrease of about 30 rigs in 2024. This decline contributed to a challenging market environment for Nine Energy Service, impacting its operations and financial performance.

Forward-Looking Guidance

Looking ahead, Nine Energy Service anticipates Q1 2025 revenue between $146 million and $152 million, driven by market share gains and cost-cutting measures. The company also expects growth in the international tools market and plans to construct a new R&D facility in Texas to enhance its technology offerings, signaling a strategic focus on innovation and expansion.

In conclusion, Nine Energy Service’s earnings call highlighted a blend of achievements and challenges. While the company faced a net loss and market pressures, its growth in the Cementing division, product innovations, and cost-efficiency measures provide a solid foundation for future success. The company’s optimistic outlook and strategic initiatives suggest potential for growth in the coming year.