In its Q3 2023 earnings report, Nine Energy Service (NYSE:NINE) revealed a revenue of $140.6 million and adjusted EBITDA of $11.6 million, alongside a diluted EPS of -$0.39. The company experienced a downturn in activity due to a decrease in rig count, which resulted in pricing pressure across all service lines. Despite the decline, the company expressed optimism for Q4 and the following year, 2024.
Key takeaways from the earnings call:
- The company experienced a decline in activity due to a decrease in rig count, affecting all service lines, particularly cementing activity.
- Completion tool revenue also decreased due to a reduction in international sales and U.S. completion activity.
- Despite a challenging Q3, the company is optimistic about Q4 and 2024, expecting increased adjusted EBITDA, margin, and slightly higher revenue for Q4.
- The company announced the commercialization of the Pincer hybrid frac plug, a new product offering industry-leading drill-out times and reducing bit wear.
- An unusually large international order in Q2 impacted Q3 results, but the company continues to focus on diversifying its revenue streams and international markets.
- Nine Energy Service, listed as NYSE:NINE, expressed confidence in the stock’s value despite the current market conditions.
During the earnings call, Ann Fox, an executive at Nine Energy Service, emphasized the company’s strategy of diversifying revenue streams and focusing on international markets. Despite a decline in Q3 due to an unusually large international order in Q2, Fox expressed confidence in the company’s future performance. She highlighted the successful uptake of their Stinger dissolvable frac plugs and the introduction of the Pincer to address the composite-based plugs market.
The company’s focus on innovation and evolving technology to meet customer demands for efficiency was also underscored. Increased activity levels and customer calls were noted as positive indicators for improved market conditions. While no specific guidance was provided, the company anticipates an overall increase in adjusted EBITDA and EBITDA margin, with expectations for a better Q4 compared to Q3.
In closing, Fox thanked employees, E&P partners, and investors, expressing optimism about increased activity in 2024. Despite the challenges in Q3, the company believes the stock, NYSE:NINE, is undervalued and is looking forward to a more stable Q4.
Nine Energy Service has a market capitalization of 89.78M USD. The company’s revenue for the last twelve months as of Q2 2023 was 658.94M USD, indicating a growth of 44.11%. The P/E Ratio (Adjusted) for the same period stands at 10.39.
