Nine Energy Service, Inc.

Greetings and welcome to the Q3 2024 Nine Energy Service Earnings Call. At this time, all participants are in listen-only mode. A brief question and answer session will follow the formal presentation. Should anyone require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference call is being recorded. It is now my pleasure to introduce 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 Nye Energy Service earnings conference call to discuss our results for the third 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 Nye'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 third 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 third quarter results for 2024. Revenue for the quarter was 138.2 million, which was above the range of our original guidance of 127 to 137 million. We generated adjusted EBITDA of 14.3 million, an increase of approximately 47% quarter over quarter, and diluted EPS of negative 26 cents. Incremental adjusted EBITDA margins were approximately 79%. Overall, the U.S. land market was relatively stable this quarter, with the average U.S. rig count declining by approximately 3% from Q2. The natural gas price continues to be extremely challenging, averaging just above $2 for the year through the end of Q3. Low natural gas prices have led to sustained lower activity levels in the Hainesville and Northeast, as well as completion delays and white space in the calendar. Despite this, our total revenue grew by approximately 4% quarter over quarter, driven mostly by our cementing business, where we increased market share by approximately 23% quarter over quarter within the areas we operate. The cementing team increased jobs completed by approximately 9% quarter over quarter, and revenue by approximately 12%, despite the rig count decreasing. Our cementing team adopted a deliberate strategy to win market share, re-evaluating our pricing versus market share balance while boosting sales efforts, and they were able to execute. We also continue to offer the most advanced cement slurries coupled with excellent delivery and on-site execution and service, which continues to differentiate us in the market. Pricing for all service lines remained relatively stable this quarter. However, in conjunction with the revenue increase, better utilization within cementing and coil, higher international tool sales, and supply chain efforts across service lines, adjusted EBITDA increased by approximately 47% quarter-over-quarter with incremental margins of approximately 79%. We are always watching costs very closely, but starting in late Q2, we began to see our cost reduction and supply chain initiatives positively impact our profitability. Cost reductions have come through a number of strategies and programs, including a reduction in the cost of our operating structure, as well as vendor consolidation and rationalization across the organization, which has helped reduce some of our largest material costs. This is an ongoing effort and will continue to be a top priority as we look for sustainable ways to increase profitability. Revenue within our remaining service lines was relatively flat quarter over quarter. Our international completion tool revenue increased quarter over quarter, but was offset by lower activity levels, specifically in the northeast in Hainesville. We have been extremely happy with the commercialization of our pincer hybrid frac plug, as well as our frac dart. We are running our pincer plug with some of the largest operators in the US and are quickly gaining market share across basins. As a reminder, this product has approximately 50% less material than our current composite frac plug and allows for plug drill out times as low as two minutes per plug, saving significant time and meaningfully reducing bit wear for our customers. in some cases eliminating a bit trip. The Scorpion with FractArt allows operators the chance to reinitiate pump-down operations if the guns do not fire post-plug setting. With the FractArt, operators can eliminate the need to pump down a ball, saving time, water, usage, and money. Despite over 50% of our wireline revenue coming out of the Northeast, revenue remained flat this quarter, and our team continues to hold steady in a very competitive market. Despite a very saturated competitive landscape in the Permian Basin, we have been able to win market share in this region, supplementing work with our crews from the Northeast to maximize efficiency. Coal tubing revenue increased by approximately 5% this quarter due to better utilization, with days worked increasing by approximately 8% this quarter. I would now like to turn the call over to Guy to walk through detailed financial information.