Nine Energy Revenue Rises but EBITDA Misses as Coiled Tubing Falters
Nine Energy Service posted second-quarter revenue of $141.8 million, up from $130.0 million in the first quarter, but adjusted EBITDA of $8.6 million fell short of its own $10.0-to-$15.0-million guidance range.
Nine Energy Service (NINE) reported second-quarter revenue of $141.8 million, landing within its guided range of $136 million to $146 million and up from a combined $130.0 million in the first quarter. The oilfield-services provider's adjusted EBITDA of $8.6 million came in below the $10.0-to-$15.0-million range management had set at the start of the quarter, and also trailed the first quarter's combined adjusted EBITDA of $3.0 million on a smaller revenue base.
The shortfall traced to a newly disclosed equipment problem. Two large-diameter coiled tubing units, representing roughly 17% of that fleet, were pulled from service in the second quarter for maintenance issues. One returned to work in early the third quarter; the other is not expected back until near year-end. Coiled Tubing was the primary drag on results, a reversal from the first quarter, when the segment drew no specific mention.
Nine Energy posted a net loss of $(4.9) million, or $(0.35) a share, compared with a successor-period net loss of $(1.3) million in the first quarter. The first quarter's predecessor period had shown net income of $107.9 million, driven by $124.1 million in non-cash reorganization gains tied to fresh-start accounting applied effective March 5, 2024 — a figure the company said was not comparable to ongoing operations. That accounting shift split the first quarter into predecessor and successor periods and continues to complicate year-over-year comparisons in the second-quarter release.
Adjusted gross profit rose to $19.9 million, or 14.1% of revenue, from a combined $13.8 million, or about 10.6% of revenue, in the first quarter. GAAP gross margin of 9.1% was roughly flat against the first quarter's combined 4.4%. Despite the sequential improvement, there was significant margin compression within Coiled Tubing, tempering the read-through from the adjusted figures.
Completion Tools stood out as the strongest performer in the quarter, with domestic and international growth alongside continued demand for its dissolvable plugs. That marks a shift in emphasis from the first quarter, when Nine Energy highlighted a milestone of more than 500,000 Scorpion Composite Plugs sold without singling out the segment's margin performance. The Wireline division, described in the first quarter as hampered by weather-related inefficiencies, was instead characterized as making steady progress on a Haynesville Basin expansion, with no further mention of weather disruption.
The company's tone on natural gas prices also shifted. Average gas prices of $4.71 in the first quarter versus $3.73 in the fourth quarter of 2023 were a supportive factor; the second-quarter release dropped that framing and instead pointed to cost inflation across labor, consumables, and repairs and maintenance.
For the third quarter, Nine Energy now expects revenue and profitability to run flat to modestly down versus the second quarter, a softer outlook than the improvement in financial results the company had projected for the second quarter in its prior release. Full-year capital expenditure guidance was reiterated unchanged at $20 million to $30 million.
Liquidity held roughly steady at $46.8 million at June 30, compared with $46.9 million at March 31. Revolver borrowings under the Exit ABL Facility climbed to $97.3 million outstanding, with $30.0 million of availability remaining, up from a $90.4 million long-term debt balance at the end of the first quarter, after the company drew $5.0 million in new proceeds during the second quarter. Cash rose to $16.8 million from $11.2 million, aided by that draw, even as net cash used in operating activities narrowed to $2.3 million from a combined $12.4 million across the two first-quarter stub periods.