Frac deployment in the US to remain steady: NexTier Oilfield’s (NEX) management is optimistic about the US hydraulic fracturing market stability. It believes that the US onshore activity will increase because of the demand-supply gap in the global market. It expects customer demand to remain steady, supporting its initiatives to transition the traditional mechanical frac spreads to natural gas fuel power. The industry frac equipment utilization is also expected to remain high. Read more about this in our recent article here.
Steady fundamentals metrics to continue to Q2: Quarter-over-quarter, NEX’s revenues increased by 2.8% in Q1, while its adjusted EBITDA margin increased incrementally by 100 basis points. Better pricing and increased activity in wellsite integration led to performance improvement in Q1. In Q2, the management expects frac equipment to remain sold out as it expects to achieve “moderate sequential revenue growth, with adjusted EBITDA expected to improve.”
NEX’s cash flows and leverage: NEX’s cash flow from operations improved tremendously in Q1 2023 compared to a year ago. Free cash flow turned positive in Q1 2023 from a negative FCF a year ago. The company’s debt-to-equity remained low at 0.35x as of March 31.
Thanks for reading the NEX take three, designed to give you three critical takeaways from NEX’s earnings report. Soon we will present a second update on NEX earnings highlighting its current strategy, news, and notes we extracted from our deeper dive.
