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Nine Energy Service First Quarter 2019 Results

Share Print Bookmark    |    Tuesday,May 07,2019

Nine Energy Service, Inc. reported its first quarter 2019 results.

Financials

The company reported first quarter 2019 revenues of $229.7 million, net income of $17.3 million and adjusted EBITDA of $39.2 million. First quarter basic earnings per share was $0.59. First quarter 2019 adjusted net income^D was $22.1 million, or $0.76 adjusted basic earnings per share, compared to fourth quarter 2018 adjusted net income of $13.6 million, or $0.49 adjusted basic earnings per share, an increase of approximately 63% and 55%, respectively. The Company reported first quarter 2019 adjusted EBITDA of $39.2 million and a first quarter adjusted EBITDA margin^A of approximately 17%. During the first quarter of 2019, the Company generated ROIC of 13%.

The Company had provided original first quarter 2019 revenue guidance between $220.0 and $230.0 million and adjusted EBITDA guidance between $37.0 and $41.0 million, with actual results exceeding the midpoint of first quarter 2019 revenue guidance by approximately 2% and meeting the midpoint of first quarter 2019 adjusted EBITDA guidance.

CEO Ann Fox said: “The first quarter was in-line with what we anticipated, with both revenue and adjusted EBITDA falling at the midpoint or above of Management’s original guidance range. Activity was steady across the majority of our service lines, with our cementing division outperforming the market as we continue to gain market share through the combination of technical slurry development and execution at the wellsite. Pricing within the portfolio has stabilized with the recovery in oil prices and we believe the worst is behind us. We remain extremely positive around the dissolvable plug thesis as operators continue the development of large-scale well pad programs, adding complexity to the completion process and reinforcing an extreme focus on efficiencies and reducing cycle times.

“I am confident in our differentiation in the market and the Company’s ability to be nimble and flex with the industry. Our 2019 view is unchanged at this time and we anticipate consistent results in Q2. We remain well-positioned to capitalize on any potential activity tailwinds resulting from the improved commodity price and believe we can continue to gain market share across our Completions offering.”

Business Segment Results

Completion Solutions

During the first quarter of 2019, the Company’s Completion Solutions segment, which includes the Company’s cementing, completion tools, wireline and coiled tubing services, reported revenues of $209.1 million compared to fourth quarter 2018 revenues of $209.0 million. For the first quarter 2019, Completion Solutions reported adjusted gross profit^E of $47.7 million compared to fourth quarter 2018 adjusted gross profit of $55.1 million.

Production Solutions

During the first quarter of 2019, the Company’s Production Solutions segment, which includes well services, generated revenues of $20.6 million compared to fourth quarter 2018 revenues of $20.5 million. For the first quarter 2019, Production Solutions reported adjusted gross profit of $3.4 million compared to fourth quarter 2018 adjusted gross profit of $2.8 million.

Other Financial Information

During the first quarter of 2019, the Company reported selling, general and administrative expense of $19.9 million, compared to $21.2 million for the fourth quarter of 2018. Depreciation and amortization expense ("D&A") in the first quarter of 2019 was $18.2 million, compared to $18.2 million for the fourth quarter of 2018.

During the first quarter of 2019, the Company’s effective tax rate was 2.6%. The effective tax rate for the quarter was primarily attributable to changes in pre-tax income and valuation allowance positions as well as tax liability in jurisdictions where income is expected to exceed available net operating losses.

Liquidity and Capital Expenditures

During the first quarter of 2019, the Company reported net cash provided by operating activities of $5.9 million.Capital expenditures totaled $23.4 million during the first quarter of 2019, of which approximately 10% related to maintenance capital expenditures.

During the first quarter of 2019, the Company paid down approximately $20.0 million of the outstanding ABL credit facility borrowings, resulting in $15.0 million in outstanding revolver borrowings. As of March 31, 2019, Nine’s cash and cash equivalents were $31.2 million with $129.7 million of availability under the revolving ABL credit facility, resulting in a total liquidity position of $160.9 as of March 31, 2019.