Nine Energy Service, Inc.

Greetings and welcome to Nine Energy Service second quarter 2023 earnings conference call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I will now turn the conference over to Heather Schmidt, your host. Thank you.

Thank you. Good morning, everyone, and welcome to the NINE Energy Service Earnings Conference Call to discuss our results for the second quarter of 2023. With me today are Anne Fox, President and Chief Executive Officer, and Guy Sirkis, Chief Financial Officer. We appreciate your participation. Some of our comments today may include forward-looking statements reflecting NINE's views about future events. Forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control. These risks and uncertainties can cause actual results to differ materially from our current expectations. We advise listeners to review our earnings release and the risk factors discussed in our filings with the SEC. We undertake no obligation to revise or update publicly any forward-looking statements for any reason. Our comments today also include non-GAAP financial measures, additional details and a reconciliation to the most directly comparable GAAP financial measures are also included in our second quarter press release and can be found in the investor relations section of our website. I will now turn the call over to Anne.

Thank you, Heather. Good morning, everyone. Thank you for joining us today to discuss our second quarter results for 2023. Revenue for the quarter was $161.4 million, which was within our original guidance of $158 to $166 million. We generated adjusted EBITDA of $21.7 million, reflecting an adjusted EBITDA margin of 13%. Diluted earnings per share was negative $0.08, and ROIC for the quarter was 12.9%. We continue to see activity declines throughout the quarter. Since the peak in Q4, the rig count has declined by over 100 rigs. or approximately 14% through Q2, with approximately 74% of these coming out of the market in the second quarter versus the first. These rig declines have resulted in additional pricing pressure throughout the quarter, affecting all of our service lines. While activity and pricing declines have been strongest in gas-levered basins, like the Haynesville and Eagleford, we are seeing some impact in the oil-driven plays as well. The Northeast rig count has been more stable, however. We are receiving pricing pressure from customers, as well as seeing completion delays and white space in the calendar affecting both revenue and margins for completion tools and wireline. EIA reported completions were down by approximately 8% quarter over quarter, and new wells drilled decreased by approximately 5%. Cementing is our service line most driven by rig count and new wells drilled. and is usually impacted first with activity changes. In conjunction with the rig decline, cementing and pricing were down single digits this quarter compared to Q1. We have significant operations in the Eagleford and Haynesville, which collectively have seen rig count declines of approximately 27% through Q2 since the end of 2022. The U.S. rig count declined approximately 14% through the first half of the year, but our total jobs completed in Q2 2023 only declined by approximately 2% compared to Q1 2023. We are focused on maintaining pricing wherever we can, as well as maintaining market share with targeted customers through our proprietary flurries and well site execution. We remain excited about this service line and our differentiation in the marketplace, but it, too, is subject to this market decline. Completion tool revenue was up this quarter due in large part to a sizable international order again this quarter. North American revenue was down, however, and has been significantly impacted by lower activity levels in areas like the Hainesville where dissolvable frack plugs are frequently used. We do believe this is temporary and that Haynesville activity will rebound and be a vital component of exported natural gas in the medium term. Even with a declining market thus far in 2023, we have sold approximately 50% more stinger dissolvable units in the first half of 2023 versus the first half of 2022. Wireline continues to be challenging from a pricing perspective, but remains an important part of NINE's portfolio. The Permian Basin is highly fragmented and saturated, and we are receiving pricing pressure in the service line despite minimal price increases in 2022. In the Northeast, we are maintaining market share, but we are receiving pricing pressure due to lower natural gas prices and delayed completions programs, which will compress margins. Coil TV is performing well, considering over 50% of our revenue is generated in the Haynesville and Engleford. The dust count has increased in the Haynesville, which could potentially provide significant future opportunities for the service line as well as for completion tools. I would now like to turn the call over to Guy to walk through detailed financial information.