Nine Energy Service Announces Third Quarter 2021 Results
Nine Energy Service reported a total liquidity of $85.4 million as of September 30, 2021. For Q3 2021, revenue was $92.9 million, with a net loss of $(16.1) million and a basic loss per share of $(0.53). Adjusted EBITDA was $4.5 million. Although revenue increased approximately 9% from the previous quarter, it fell short of guidance due to labor constraints in the Permian Basin. All service lines showed sequential growth, particularly in Completion Tool and Coiled Tubing services.
- Total liquidity of $85.4 million as of September 30, 2021.
- Sequential revenue increase of 9% quarter over quarter.
- Strong performance in Completion Tool and Coiled Tubing service lines.
- Expected flat to slightly up revenue in Q4 compared to Q3 2021.
- Net loss of $(16.1) million for Q3 2021.
- Basic loss per share of $(0.53).
- Revenue guidance was not met, falling below expected range due to labor shortages.
- Labor constraints may continue to challenge operations in the Permian Basin.
-
Total liquidity position of
$85.4 million September 30, 2021 -
Revenue, net loss and adjusted EBITDAA of
$92.9 million $(16.1) million $4.5 million -
Third quarter basic loss per share of
$(0.53)
The Company had provided original third quarter 2021 revenue guidance between
“Sequential revenue increases this quarter of approximately
“During Q3, we continued to see moderate activity increases with both US completions and active frac crews increasing between 5
“All of our service lines’ revenues increased sequentially, with our Completion Tool and Coiled Tubing service lines performing particularly well. Our Completion Tool performance was driven mostly by an increase in our Dissolvable Stinger units sold, which increased by approximately
“Looking into Q4, our customers remain focused on coming within or below their original 2021 capex budgets; however, we do not anticipate budget exhaustion, or the effects of holidays will be as severe as in previous years. We expect Q4 revenue will be flat to slightly up compared to Q3. With what we know today, we anticipate North American capex spending will increase in 2022, which coupled with the robust commodity price environment supports increased activity for 2022 over 2021.”
Operating Results
During the third quarter of 2021, the Company reported revenues of
During the third quarter of 2021, the Company reported selling, general and administrative (“SG&A”) expense of
The Company’s tax provision for the third quarter of 2021 was approximately
Liquidity and Capital Expenditures
During the third quarter of 2021, the Company reported net cash used in operating activities of
As of
ABCDESee end of press release for definitions
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About
For more information on the Company, please visit Nine’s website at nineenergyservice.com.
Forward-Looking Statements
The foregoing contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are those that do not state historical facts and are, therefore, inherently subject to risks and uncertainties. Forward-looking statements also include statements that refer to or are based on projections, uncertain events or assumptions. The forward-looking statements included herein are based on current expectations and entail various risks and uncertainties that could cause actual results to differ materially from those forward-looking statements. Such risks and uncertainties include, among other things, the level of capital spending and well completions by the onshore oil and natural gas industry, which has been and may again be affected by the COVID-19 pandemic and related economic repercussions; the ability of the OPEC+ countries to agree on and comply with supply limitations; operational challenges relating to the COVID-19 pandemic and efforts to mitigate the spread of the virus, including logistical challenges, protecting the health and well-being of our employees, remote work arrangements, performance of contracts and supply chain disruptions; pricing pressures, reduced sales, or reduced market share as a result of intense competition in the markets for the Company’s dissolvable plug products; the Company’s ability to implement and commercialize new technologies, services and tools; the Company’s ability to grow its completion tool business; the Company’s ability to manage capital expenditures; the Company’s ability to accurately predict customer demand; the loss of, or interruption or delay in operations by, one or more significant customers; the loss of or interruption in operations of one or more key suppliers; the adequacy of the Company’s capital resources and liquidity; the incurrence of significant costs and liabilities resulting from litigation; the loss of, or inability to attract, key personnel, technical personnel and other skilled and qualified workers; the Company’s ability to successfully integrate recently acquired assets and operations and realize anticipated revenues, cost savings or other benefits thereof; and other factors described in the “Risk Factors” and “Business” sections of the Company’s most recently filed Annual Report on Form 10-K and subsequently filed Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof, and, except as required by law, the Company undertakes no obligation to update those statements or to publicly announce the results of any revisions to any of those statements to reflect future events or developments.
|
|||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS) |
|||||||||
(In Thousands, Except Share and Per Share Amounts) |
|||||||||
(Unaudited) |
|||||||||
Three Months Ended |
|||||||||
|
|
||||||||
Revenues |
$ |
92,868 |
|
$ |
84,832 |
|
|||
Cost and expenses |
|||||||||
Cost of revenues (exclusive of depreciation and |
|||||||||
amortization shown separately below) |
|
78,879 |
|
|
76,638 |
|
|||
General and administrative expenses |
|
11,114 |
|
|
12,167 |
|
|||
Depreciation |
|
6,921 |
|
|
7,438 |
|
|||
Amortization of intangibles |
|
4,029 |
|
|
4,091 |
|
|||
Loss on revaluation of contingent liabilities |
|
21 |
|
|
45 |
|
|||
(Gain) loss on sale of property and equipment |
|
(17 |
) |
|
950 |
|
|||
Loss from operations |
|
(8,079 |
) |
|
(16,497 |
) |
|||
Interest expense |
|
7,968 |
|
|
7,981 |
|
|||
Interest income |
|
(3 |
) |
|
(8 |
) |
|||
Other income |
|
(34 |
) |
|
(35 |
) |
|||
Loss before income taxes |
|
(16,010 |
) |
|
(24,435 |
) |
|||
Provision for income taxes |
|
41 |
|
|
95 |
|
|||
Net loss |
$ |
(16,051 |
) |
$ |
(24,530 |
) |
|||
Loss per share |
|||||||||
Basic |
$ |
(0.53 |
) |
$ |
(0.81 |
) |
|||
Diluted |
$ |
(0.53 |
) |
$ |
(0.81 |
) |
|||
Weighted average shares outstanding |
|||||||||
Basic |
|
30,449,286 |
|
|
30,424,026 |
|
|||
Diluted |
|
30,449,286 |
|
|
30,424,026 |
|
|||
Other comprehensive income (loss), net of tax |
|||||||||
Foreign currency translation adjustments, net of tax of |
$ |
(102 |
) |
$ |
29 |
|
|||
Total other comprehensive income (loss), net of tax |
|
(102 |
) |
|
29 |
|
|||
Total comprehensive loss |
$ |
(16,153 |
) |
$ |
(24,501 |
) |
|||
|
||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
||||||||
(In Thousands) |
||||||||
(Unaudited) |
||||||||
|
|
|||||||
Assets |
||||||||
Current assets |
||||||||
Cash and cash equivalents |
$ |
29,969 |
|
$ |
33,128 |
|
||
Accounts receivable, net |
|
58,579 |
|
|
58,888 |
|
||
Income taxes receivable |
|
1,205 |
|
|
1,246 |
|
||
Inventories, net |
|
43,019 |
|
|
41,300 |
|
||
Prepaid expenses and other current assets |
|
11,084 |
|
|
8,741 |
|
||
Total current assets |
|
143,856 |
|
|
143,303 |
|
||
Property and equipment, net |
|
83,749 |
|
|
88,493 |
|
||
Operating lease right-of-use assets, net |
|
33,877 |
|
|
34,062 |
|
||
Finance lease right-of-use assets, net |
|
1,517 |
|
|
1,617 |
|
||
Intangible assets, net |
|
120,312 |
|
|
124,341 |
|
||
Other long-term assets |
|
2,572 |
|
|
2,823 |
|
||
Total assets |
$ |
385,883 |
|
$ |
394,639 |
|
||
Liabilities and Stockholders’ Equity |
||||||||
Current liabilities |
||||||||
Accounts payable |
$ |
23,713 |
|
$ |
28,597 |
|
||
Accrued expenses |
|
29,455 |
|
|
17,805 |
|
||
Current portion of long-term debt |
|
1,125 |
|
|
1,125 |
|
||
Current portion of operating lease obligations |
|
5,689 |
|
|
5,732 |
|
||
Current portion of finance lease obligations |
|
1,132 |
|
|
1,144 |
|
||
Total current liabilities |
|
61,114 |
|
|
54,403 |
|
||
Long-term liabilities |
||||||||
Long-term debt |
|
317,180 |
|
|
317,045 |
|
||
Long-term operating lease obligations |
|
29,766 |
|
|
29,944 |
|
||
Long-term finance lease obligations |
|
259 |
|
|
523 |
|
||
Other long-term liabilities |
|
2,296 |
|
|
2,455 |
|
||
Total liabilities |
|
410,615 |
|
|
404,370 |
|
||
Stockholders’ equity |
||||||||
Common stock (120,000,000 shares authorized at |
|
328 |
|
|
314 |
|
||
Additional paid-in capital |
|
772,135 |
|
|
770,997 |
|
||
Accumulated other comprehensive loss |
|
(4,533 |
) |
|
(4,431 |
) |
||
Accumulated deficit |
|
(792,662 |
) |
|
(776,611 |
) |
||
Total stockholders’ equity |
|
(24,732 |
) |
|
(9,731 |
) |
||
Total liabilities and stockholders’ equity |
$ |
385,883 |
|
$ |
394,639 |
|
||
|
||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||||
(In Thousands) |
||||||||
(Unaudited) |
||||||||
Three Months Ended |
||||||||
|
|
|||||||
Cash flows from operating activities |
||||||||
Net loss |
$ |
(16,051 |
) |
$ |
(24,530 |
) |
||
Adjustments to reconcile net loss to net cash used in operating activities |
||||||||
Depreciation |
|
6,921 |
|
|
7,438 |
|
||
Amortization of intangibles |
|
4,029 |
|
|
4,091 |
|
||
Amortization of deferred financing costs |
|
642 |
|
|
642 |
|
||
Amortization of operating leases |
|
1,955 |
|
|
2,005 |
|
||
Recovery of doubtful accounts |
|
(148 |
) |
|
(118 |
) |
||
Provision for inventory obsolescence |
|
408 |
|
|
2,356 |
|
||
Stock-based compensation expense |
|
1,153 |
|
|
1,028 |
|
||
(Gain) loss on sale of property and equipment |
|
(17 |
) |
|
950 |
|
||
Loss on revaluation of contingent liabilities |
|
21 |
|
|
45 |
|
||
Changes in operating assets and liabilities, net of effects from acquisitions |
||||||||
Accounts receivable, net |
|
419 |
|
|
(10,599 |
) |
||
Inventories, net |
|
(2,163 |
) |
|
(4,874 |
) |
||
Prepaid expenses and other current assets |
|
(3,336 |
) |
|
3,880 |
|
||
Accounts payable and accrued expenses |
|
6,388 |
|
|
235 |
|
||
Income taxes receivable/payable |
|
41 |
|
|
(104 |
) |
||
Other assets and liabilities |
|
(2,097 |
) |
|
(2,071 |
) |
||
Net cash used in operating activities |
|
(1,835 |
) |
|
(19,626 |
) |
||
Cash flows from investing activities |
||||||||
Proceeds from sales of property and equipment |
|
1,014 |
|
|
1,140 |
|
||
Purchases of property and equipment |
|
(1,712 |
) |
|
(692 |
) |
||
Net cash provided by (used in) investing activities |
|
(698 |
) |
|
448 |
|
||
Cash flows from financing activities |
||||||||
Payments on Magnum promissory notes |
|
(281 |
) |
|
- |
|
||
Purchases of senior notes |
|
- |
|
|
- |
|
||
Payments on finance leases |
|
(276 |
) |
|
(270 |
) |
||
Payments of contingent liabilities |
|
(46 |
) |
|
(34 |
) |
||
Vesting of restricted stock |
|
(1 |
) |
|
(341 |
) |
||
Net cash used in financing activities |
|
(604 |
) |
|
(645 |
) |
||
Impact of foreign currency exchange on cash |
|
(22 |
) |
|
(31 |
) |
||
Net decrease in cash and cash equivalents |
|
(3,159 |
) |
|
(19,854 |
) |
||
Cash and cash equivalents |
||||||||
Beginning of period |
|
33,128 |
|
|
52,982 |
|
||
End of period |
$ |
29,969 |
|
$ |
33,128 |
|
||
|
||||||||
RECONCILIATION OF ADJUSTED GROSS PROFIT (LOSS) |
||||||||
(In Thousands) |
||||||||
(Unaudited) |
||||||||
Three Months Ended |
||||||||
|
|
|||||||
Calculation of gross profit (loss) |
||||||||
Revenues |
$ |
92,868 |
$ |
84,832 |
|
|||
Cost of revenues (exclusive of depreciation and |
||||||||
amortization shown separately below) |
|
78,879 |
|
76,638 |
|
|||
Depreciation (related to cost of revenues) |
|
6,437 |
|
6,917 |
|
|||
Amortization of intangibles |
|
4,029 |
|
4,091 |
|
|||
Gross profit (loss) |
$ |
3,523 |
|
$ |
(2,814 |
) |
||
Adjusted gross profit reconciliation |
||||||||
Gross profit (loss) |
$ |
3,523 |
$ |
(2,814 |
) |
|||
Depreciation (related to cost of revenues) |
|
6,437 |
|
6,917 |
|
|||
Amortization of intangibles |
|
4,029 |
|
4,091 |
|
|||
Adjusted gross profit |
$ |
13,989 |
|
$ |
8,194 |
|
||
|
||||||||
RECONCILIATION OF EBITDA AND ADJUSTED EBITDA |
||||||||
(In Thousands) |
||||||||
(Unaudited) |
||||||||
|
|
|
|
|
||||
|
|
Three Months Ended |
||||||
|
|
|
|
|
||||
EBITDA reconciliation: |
||||||||
Net loss |
$ |
(16,051 |
) |
$ |
(24,530 |
) |
||
Interest expense |
|
7,968 |
|
|
7,981 |
|
||
Interest income |
|
(3 |
) |
|
(8 |
) |
||
Provision for income taxes |
|
41 |
|
|
95 |
|
||
Depreciation |
|
6,921 |
|
|
7,438 |
|
||
Amortization of intangibles |
|
4,029 |
|
|
|
4,091 |
|
|
EBITDA |
$ |
2,905 |
|
$ |
(4,933 |
) |
||
Loss on revaluation of contingent liabilities (1) |
|
21 |
|
|
45 |
|
||
Restructuring charges |
|
375 |
|
|
745 |
|
||
Stock-based compensation expense |
|
1,153 |
|
|
1,028 |
|
||
(Gain) loss on sale of property and equipment |
|
(17 |
) |
|
950 |
|
||
Legal fees and settlements (2) |
|
17 |
|
|
1,735 |
|
||
Adjusted EBITDA |
$ |
4,454 |
|
|
$ |
(430 |
) |
|
(1) Amounts relate to the revaluation of contingent liabilities associated with the Company's 2018 acquisitions |
||||||||
(2) Amounts represent fees, legal settlements and/or accruals associated with legal proceedings brought pursuant to the Fair Labor Standards Act and/or similar state laws. |
||||||||
|
||||||||
RECONCILIATION OF ROIC CALCULATION |
||||||||
(In Thousands) |
||||||||
(Unaudited) |
||||||||
|
|
|
|
|
||||
|
|
Three Months Ended |
||||||
|
|
|
|
|
||||
Net loss |
$ |
(16,051 |
) |
$ |
(24,530 |
) |
||
Add back: |
||||||||
Interest expense |
|
7,968 |
|
|
7,981 |
|
||
Interest income |
|
(3 |
) |
|
(8 |
) |
||
Restructuring charges |
|
375 |
|
|
745 |
|
||
After-tax net operating loss |
$ |
(7,711 |
) |
$ |
(15,812 |
) |
||
Total capital as of prior period-end: |
||||||||
Total stockholders' equity |
$ |
(9,731 |
) |
$ |
14,083 |
|
||
Total debt |
|
322,031 |
|
|
322,031 |
|
||
Less: cash and cash equivalents |
|
(33,128 |
) |
|
|
(52,982 |
) |
|
Total capital as of prior period-end: |
$ |
279,172 |
|
|
$ |
283,132 |
|
|
Total capital as of period-end: |
||||||||
Total stockholders' equity |
$ |
(24,732 |
) |
$ |
(9,731 |
) |
||
Total debt |
|
321,750 |
|
|
322,031 |
|
||
Less: cash and cash equivalents |
|
(29,969 |
) |
|
|
(33,128 |
) |
|
Total capital as of period-end: |
$ |
267,049 |
|
$ |
279,172 |
|
||
|
|
|
||||||
Average total capital |
$ |
273,111 |
|
|
$ |
281,152 |
|
|
ROIC |
|
-11 |
% |
|
-22 |
% |
||
|
||||||||
RECONCILIATION OF ADJUSTED NET LOSS AND ADJUSTED BASIC EARNINGS (LOSS) PER SHARE CALCULATION |
||||||||
(In Thousands) |
||||||||
(Unaudited) |
||||||||
|
|
|
|
|
||||
|
|
Three Months Ended |
||||||
|
|
|
|
|
||||
Reconciliation of adjusted net loss: |
||||||||
Net loss |
$ |
(16,051 |
) |
$ |
(24,530 |
) |
||
Add back: |
||||||||
Restructuring charges |
|
375 |
|
|
745 |
|
||
Adjusted net loss |
$ |
(15,676 |
) |
|
$ |
(23,785 |
) |
|
Weighted average shares |
||||||||
Weighted average shares outstanding for basic |
|
30,449,286 |
|
|
30,424,026 |
|
||
and adjusted basic earnings (loss) per share |
||||||||
Loss per share: |
||||||||
Basic loss per share |
$ |
(0.53 |
) |
$ |
(0.81 |
) |
||
Adjusted basic loss per share |
$ |
(0.51 |
) |
$ |
(0.78 |
) |
||
(a) Amount represents the difference between the repurchase price and the carrying amount of Senior Notes repurchased during the respective period. |
AAdjusted EBITDA is defined as net income (loss) before interest, taxes, and depreciation and amortization, further adjusted for (i) goodwill, intangible asset, and/or property and equipment impairment charges, (ii) transaction and integration costs related to acquisitions, (iii) loss or gain on revaluation of contingent liabilities, (iv) loss or gain on the extinguishment of debt, (v) loss or gain on the sale of subsidiaries, (vi) restructuring charges, (vii) stock-based compensation expense, (viii) loss or gain on sale of property and equipment, and (ix) other expenses or charges to exclude certain items which we believe are not reflective of ongoing performance of our business, such as legal expenses and settlement costs related to litigation outside the ordinary course of business. Management believes Adjusted EBITDA is useful because it allows us to more effectively evaluate our operating performance and compare the results of our operations from period to period without regard to our financing methods or capital structure and helps identify underlying trends in our operations that could otherwise be distorted by the effect of the impairments, acquisitions and dispositions and costs that are not reflective of the ongoing performance of our business.
BAdjusted Net Income (Loss) is defined as net income (loss) adjusted for (i) goodwill, intangible asset, and/or property and equipment impairment charges, (ii) transaction and integration costs related to acquisitions, (iii) restructuring charges, (iv) loss or gain on the sale of subsidiaries, (v) loss or gain on the extinguishment of debt and (vi) the tax impact of such adjustments. Management believes Adjusted Net Income (Loss) is useful because it allows us to more effectively evaluate our operating performance and compare the results of our operations from period to period and helps identify underlying trends in our operations that could otherwise be distorted by the effect of the impairments and acquisitions.
CAdjusted Basic Earnings (Loss) Per Share is defined as adjusted net income (loss), divided by weighted average basic shares outstanding. Management believes Adjusted Basic Earnings (Loss) Per Share is useful because it allows us to more effectively evaluate our operating performance and compare the results of our operations from period to period and help identify underlying trends in our operations that could otherwise be distorted by the effect of the impairments and acquisitions.
DAdjusted Gross Profit (Loss) is defined as revenues less cost of revenues excluding depreciation and amortization. This measure differs from the GAAP definition of gross profit (loss) because we do not include the impact of depreciation and amortization, which represent non-cash expenses. Our management uses adjusted gross profit (loss) to evaluate operating performance. We prepare adjusted gross profit (loss) to eliminate the impact of depreciation and amortization because we do not consider depreciation and amortization indicative of our core operating performance.
EReturn on
View source version on businesswire.com: https://www.businesswire.com/news/home/20211103005055/en/
Nine Energy Service Investor Contact:
Vice President, Strategic Development, Investor Relations and Marketing
(281) 730-5113
investors@nineenergyservice.com
Source:
FAQ
What were Nine Energy Service's revenues for Q3 2021?
How much was Nine Energy Service's net loss in Q3 2021?
What is Nine Energy Service's basic loss per share for Q3 2021?
What is the total liquidity position of Nine Energy Service?
Why did Nine Energy Service's revenue fall below guidance in Q3 2021?
