Nine Energy Service, Inc.

Greetings and welcome to Nine Energy Service fourth quarter and full year 2023 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 would now like to turn the conference over to your host, Heather Schmidt, Vice President of Strategic Development and Investor Relations. Thank you. You may begin.

Thank you. Good morning, everyone, and welcome to the Nine Energy Service earnings conference call to discuss our results for the fourth quarter in full year 2023. With me today are Anne Fox, President and Chief Executive Officer, and Guy Serkis, 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 fourth 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 fourth quarter and full year results for 2023. The oil and gas market continued to be volatile in 2023. At the end of 2022, there were 779 rigs in the U.S., and by the end of 2023, the rig count was down to 622, a decline of approximately 20%. Most of these rig declines came out of the natural gas regions in conjunction with the average natural gas price declining by over 60% year over year, and was compounded by a lower average WTI price, which declined by approximately 18%, year over year from approximately $95 in 2022 to approximately $78 in 2023. Despite the market, we continue to differentiate with forward-leaning technology coupled with excellent service. I want to highlight some of the team's achievements during 2023. In January, we announced the redemption of our senior notes due 2023. In conjunction with the units offering, we amended and extended our existing asset-based revolving credit facility to January of 2027. This new capital structure gives us additional flexibility and de-levering continues to be a high priority for Nine. Operationally, we performed well and continued to be on the forefront of technology. I am extremely proud of our completion tool offering and what we have been able to accomplish this year with both our existing tools and the introduction of new tools in the domestic and international markets. Our Scorpion composite plug has surpassed over 370,000 plugs run since we acquired the technology in 2015. Our dissolvable plugs continue to perform well, and we increased our total number of dissolvable stinger units sold by approximately 18% in 2023 over 2022. We have maintained a leading market share in the U.S. dissolvable market while simultaneously selling dissolvable plugs into the international markets. In 2023, we increased our total international revenue by approximately 16% year over year. During 2023, our multi-cycle barrier valve performed very well in the Middle East, and we anticipate demand will continue to increase our market share and customer base in that region. We also announced the commercialization of our new pincer hybrid frack plug. The pincer is comprised of 47% less material than our predecessor Scorpion fully composite frack plug and offers industry leading drill out times. We look forward to gaining market share with this tool in 2024. Our service lines did a good job of defending and justifying price in 2023. Despite a declining rig environment, our total cementing revenue was down by only 2% year over year, and we were able to increase our average revenue per job by approximately 10% year-over-year. Despite significant exposure in the Hainesville Basin, our COIL team increased total revenue by approximately 3% year-over-year, and our Wireline team also increased revenue by approximately 9%. We made significant progress this year with ESG. We quantified the company's greenhouse gas emissions for 2021 and 2022, and we will have 2023 data this year. Through this process, we are identifying gaps and procedures to make the collection of this data more accurate and efficient, as well as developing a strategy on how to potentially reduce our emissions moving forward. We are in the process of formalizing our sustainability efforts for the market and continuing to provide the time and resources internally to improve. Company revenue for the year was $609.5 million. Net loss was $32.2 million. or negative 97 cents per diluted share, and negative 97 cents per basic share. Adjusted EBITDA for the year was 73 million. Now turning to Q4. Revenue for the quarter was 144.1 million, which was in the upper end of our original guidance of 137 to 147 million. Adjusted EBITDA was 14.6 million, an increase of 26% over Q3, and reflected an adjusted EBITDA margin of 10%. Net loss was $10.3 million, or negative $0.30 for diluted share and negative $0.30 for basic share. Adjusted ROIC for the fourth quarter was approximately 3.9%. Activity levels and pricing were mostly stable quarter over quarter, but as anticipated, we did not have a recurrence of the operational inefficiencies and elevated white space that occurred in August. Additionally, we saw a significant increase in our international tool sales, almost doubling international revenue in Q4 versus Q3. I would now like to turn the call over to Guy to walk through detailed financial information.