Nine Energy Service, Inc.

Greetings and welcome to Nine Energy Service Earnings Conference Call for the fourth quarter and full year 2024. 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. I would now like to turn this conference over to your host, Heather Schmidt, Senior Vice President of Strategic Development and IR.

Thank you. Good morning, everyone, and welcome to the Nine Energy Service Earnings Conference Call to discuss our results for the fourth quarter and full year 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 fourth 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 fourth quarter and full year results for 2024. As we evaluate this past year, the nine team had many accomplishments despite a continued and challenging backdrop for the oil field service sector. We ended the year with around 590 rigs in the US market, a decline of a little over 30 rigs for the year. This was following 2023, where we saw over 150 rigs come out of the market. These rig declines were driven in large part by depressed natural gas prices, which averaged around $2.19 for the year. Low natural gas prices contributed to lower activity levels in the US market, as well as pricing pressure, specifically in the gas levered basins like the Haynesville and Northeast, where nine has historically generated over 30% of our total revenue. Our oil levered customers kept activity levels relatively flat this year, but they too felt the impact of low gas prices throughout most of 2024. We continue to see significant consolidation amongst our customers who remain committed to capital discipline. Operators are getting larger, and we are helping them become more efficient, doing much more with less, which led to an increase in U.S. production again in 2024, despite the rig count decreasing by almost 25% over the last two years. Nine is a spot market business, and historically, our earnings have moved almost in tandem with the U.S. rig count. These market drivers will continue to significantly impact our earnings, however, Beginning in the first half of 2024, we formulated and began executing a two-prong strategy to drive profitability for nine in a declining or flat rig count environment. This included implementing cost-cutting measures as well as profitable market share gains across service lines and basins. Our team did an excellent job executing this strategy, and we began seeing the financial impacts in Q3, and we continued to see them in Q4. After increasing adjusted EBITDA in Q3 by approximately 47% despite the average rig count declining by 3%, we once again increased revenue by approximately 2% and maintained flat adjusted EBITDA in Q4 despite weather, holiday, and budget exhaustion impacts. Without the typical seasonality impacts in Q4, we are confident we would have seen Q4 adjusted EBITDA increase sequentially over Q3. I am extremely proud of this team who continued to uncover every opportunity to drive margin expansion through cost-cutting initiatives and market share wins. And I do believe we have differentiated ourselves in the market. The cementing division was the largest driver of our revenue and profitability gains over the last two quarters. From Q2 to Q4 of 2024, cementing revenue has increased by approximately 20%. C-Menting had its best quarter of the year in Q4, despite the 2024 U.S. rig count being at its trough. We were able to exit 2024 with a market share within the regions we operate of approximately 19%, an increase of approximately 14% over our Q4 2023 average, while simultaneously increasing profitability throughout the year through better utilization and cost reductions. Our cementing team remains at the forefront of technology and execution, servicing the longest and most complicated laterals. For example, during Q4, our team successfully cemented one of our longest laterals to date in the Permian Basin for one of the largest acreage holders in the Permian Basin. The well had measured depth of almost 31,000 feet with nearly four miles of lateral length. The operator utilized one of our proprietary slurries, nine light, which combines both the low density required to achieve the desired cement coverage and the elevated compressive strength required for completion and production activities. The cement slurry was optimized to safely travel through the extended lateral while neither settling nor causing excessive friction pressure. Furthermore, the placement was engineered to place cement across multiple pay zones without fracturing the formation. As expected, this was but one of over 1,100 cementing jobs performed in Q4, delivered on time, on budget, and without any non-productive time or HSE incidents. We anticipate our customers will continue to expand lateral length, which benefits nine across all of our service offerings. Our team continued a relentless focus on technology in 2024, fielding multiple new completion tool technologies, and I am confident in saying we still have one of the top completion tool offerings in the U.S. We introduced the new pincer hybrid frac plug, a plug that utilizes both composite and dissolvable materials, and is almost half the size of our original scorpion composite plugs, allowing for plug drill-out times as low as two minutes per plug. Additionally, we added a frac dart element to our existing scorpion plug, which allows operators the chance to reinitiate pump-down operations if the guns do not fire post-plug settings. With the FractArt, operators can eliminate the need to pump down a ball, saving time, water usage, and money. We remain bullish on the dissolvable plug thesis. As lateral lengths expand, the drilling out of plugs becomes much more complicated and difficult. Nine Stinger dissolvable plug has helped operators extend lateral lengths without compromising reliability. Growth in the international tools market remains a feature of our strategy, and we expect growth in this market year over year in 2025. Our R&D team in Norway continues to enhance our offering, demonstrating that our multi-cycle barrier valve can outperform the competition. Our team here in the U.S. allowed us to successfully penetrate the niche and growing reef rack market along with others with great success. We will be constructing a state of the art R&D and testing facility in Texas to enhance our technology moving forward and speed up the R&D cycle from conception to commercialization. This new facility is an important part of continuing to be a premier completion tool provider for the U.S. and international markets moving forward. Our wireline team, despite being in one of the most saturated service lines with NOFS, was able to increase their profitability throughout the year while maintaining flat revenue and reported their best revenue month of the year during Q4. Safe operations are essential and drive operational excellence sustain morale, and create cohesion in the team from the field to the corporate office. This year, our TRIR declined 22% from 2023 to a 0.49, and the severity of our incidents also dropped. We are proudly a fossil fuels company, but we do care about how we operate and the implications of our operations on the communities within which we operate today. We launched our first sustainability report in 2024 which includes tough to get measurements for a corporation of our size. Our operational team worked hard and played an essential role in tracking and thinking about our emissions. We are extremely proud of the way we operate and the type of workplace we provide for our team. Throughout 2024, we implemented our cost reduction and supply chain initiatives, which have positively impacted 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. We believe these reductions are sustainable. This is an ongoing effort and will continue to be a top priority in 2025 as we continue to find sustainable ways to increase profitability. Company revenue for the year was $554.1 million. Net loss was $41.1 million, or negative $1.11 per diluted share and negative $1.11 per basic share. Adjusted EBITDA for the year was $53.2 million. Now turning to Q4. Revenue for the quarter was $141.4 million, which was in the upper end of our original guidance. of 132 to 142 million, and an increase of approximately 2% quarter over quarter. Adjusted EBITDA was 14.1 million, which was relatively flat to Q3. We did face typical Q4 seasonality with weather and holiday impacts, specifically in December, and like I mentioned, we believe we would have seen adjusted EBITDA growth over Q3 without these seasonal impacts. Net loss was 8.8 million or negative 22 cents per diluted share and negative 22 cents per basic share. Adjusted ROIC for the fourth quarter was approximately 6%. I would now like to turn the call over to Guy to walk through detailed financial information.

Thank you, Anne. As of December 31st, 2024, nine's cash and cash equivalents were 27.9 million with 24.2 million of availability under the revolving credit facility. resulting in a total liquidity position of 52.1 million as of December 31st, 2024. On December 31st, 2024, the company had 47 million of borrowings under the revolving credit facility. At the end of 2023, we put a $30 million ATM program in place to provide flexibility for the company. During Q4, we did not sell any shares under the ATM program. For the year end of 2024, We sold a total of approximately 5.4 million shares, which has generated net proceeds of approximately 8.2 million. During the fourth quarter, revenue totaled 141.4 million, with adjusted gross profit of 26.2 million. During the fourth quarter, we completed 1,121 cementing jobs, an increase of approximately 12% versus third quarter. The average blended revenue per job decreased by approximately 4%. Cementing revenue for the quarter was $54.8 million, an increase of approximately 7%. During the fourth quarter, we completed 6,713 wireline stages, an increase of approximately 6%. The average blended revenue per stage decreased by approximately 7%. Wireline revenue for the quarter was $27.6 million, a decrease of approximately 1%. For completion tools, we completed 25,587 stages, an increase of approximately 3%. Completion tool revenue was $33.3 million, an increase of approximately 6%. During the fourth quarter, our coil tubing day's work decreased by approximately 16%, with the average blended day rate increasing by approximately 11%. Coil tubing utilization during the quarter was 44%. Coil tubing revenue for the quarter was 25.8 million, a decrease of approximately 7%. During the fourth quarter, the company reported general and administrative expense of 14.2 million, with full year GNA of 51.3 million. Depreciation and amortization expense in the fourth quarter was 8.8 million, with full year DNA of 36.8 million. The company's tax provision was approximately 0.2 million. The provision for 2024 is the result of our tax position in state and non-US tax jurisdictions. For the year end 2024, the company reported net cash provided by operating activities of 13.2 million. The average DSO for 2024 was 55.9 days. Our total CapEx spend for 2024 was approximately $14.6 million, which came within management's original guidance of $10 to $15 million. For 2025, we anticipate total CapEx of $15 to $25 million. Our cash flow will continue to be impacted by our semi-annual interest payments of approximately $20 million in Q1 and Q3 of 2025. I will now turn it back to Anne.