Nine Energy Service, Inc.

Greetings and welcome to Nine Energy Service first quarter 2024 earnings conference call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. Instructions will be given at that time. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. I would now like to turn the conference over to your host, Heather Schmidt, Vice President of Strategic Development and Investor Relations.

Thank you. Good morning, everyone, and welcome to the Nine Energy Service Earnings Conference Call to discuss our results for the first quarter of 2024. 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 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 first quarter press release and can be found in the investor relations section of our website. I will now turn the call over to Ann. Thank you, Heather. Good morning, everyone. Thank you for joining us today to discuss our first quarter results for 2024. Revenue for the quarter was $142.1 million, which was within the upper range of our original guidance of $135 to $145 million. We generated adjusted EBITDA of $15 million, reflecting an adjusted EBITDA margin of 11%. Diluted earnings per share was negative 24 cents. During Q1, the markets were relatively stable, with the average U.S. rig count remaining flat quarter over quarter. This was reflected in our revenue, which also remained relatively flat quarter over quarter, coming in where we anticipated. Despite a flat rig count, our adjusted EBITDA increased quarter over quarter, due mostly to better utilization within coil tubing. Coil tubing days worked increased by over 40%, driving revenue growth of approximately 11% quarter over quarter. Demand for coiled tubing work was strong in the Permian, and we were able to supplement this work by sending equipment and personnel to the region from the Hainesville. Completion pool revenue was relatively flat quarter over quarter. We reached a major milestone in Q1, surpassing 60,000 dissolvable stinger units sold since we introduced the technology in Q1 of 2020. I am extremely proud of the team and the way they scaled this product without compromising quality and reliability. We remain bullish on not only the capability of our dissolvable technology, but on the continued adoption of dissolvable plugs in the U.S. market and abroad. In Q1, we began to see the impact of pricing pressure within our cementing business as we balanced market share and profitability within this rig count environment. In wireline, we maintained excellent market share in the Northeast and continue to focus on gaining additional market share in the Permian while increasing exposure to remedial and conventional wireline. I would now like to turn the call over to Guy to walk through detailed financial information.

Thank you, Anne. As of March 31, 2024, NINES cash and cash equivalents were $10.2 million, with $27.3 million of availability under the revolving ABL credit facility. resulting in a total liquidity position of $37.5 million as of March 31, 2024. At March 31, we had $52 million of borrowings under the ABL credit facility. As a reminder, during Q1, we had a $19.5 million interest payment for our notes and paid down $5 million on the ABL. Additionally, we had $5.6 million of CapEx for the quarter. As a result, our cash balance as of March 31 was at a trough, and we have already begun to build back our cash balance. All of these cash outflows were anticipated, and our cash balance will continue to ebb and flow in conjunction with our interest payments that are made in January and August. At the end of last year, we put a $30 million ATM program in place to provide flexibility for the company. During Q1, we did not sell any shares under the ATM program and have not sold any to date. As for the terms of the indenture governing our senior secured notes, we are required to periodically offer to repurchase such notes with a portion of any excess cash flow. We did not generate any excess cash flow as defined in the indenture in the most recently ended two fiscal quarters. As a result, no excess cash flow offer will be made to note holders this month. A reconciliation of this calculation is available in our Q1 earnings release. During the first quarter, revenue totaled $142.1 million with adjusted gross profit of $26.1 million. During the first quarter, we completed 943 cementing jobs, a decrease of approximately 3%. The average blended revenue per job decreased by approximately 5%. Cementing revenue for the quarter was $48.3 million, a decrease of approximately 8%. During the first quarter, we completed 6,486 wireline stages, an increase of approximately 14%. The average blended revenue per stage decreased by approximately 13%. Wireline revenue for the quarter was $27.9 million, which was flat compared to Q4. For completion tools, we completed 28,074 stages, an increase of approximately 4%. Completion tool revenue was $35.3 million, a decrease of approximately 2%. During the first quarter, our coil tubing days worked increased by approximately 41%, with the average blended day rate decreasing by approximately 21%. Coil tubing utilization was 63%, with revenue of $30.7 million, an increase of approximately 11%. During the first quarter, the company reported general and administrative expense, of $12.3 million. Depreciation and amortization expense was $9.5 million. The company's tax provision was approximately $0.2 million for the quarter. The provision for 2024 is the result of our tax position in state and non-US tax jurisdictions. The company reported net cash used in operating activities of $8.8 million. The average DSO for Q1 was 57.5 days. CapEx spend for Q1 was $5.6 million. Our 2024 CapEx guide is unchanged at $15 to $25 million, but is flexible if market conditions dictate a reduction. I will now turn it back to Anne.