A Horizontal Outlook For Q1: NINE Energy’s (NINE) management does not “foresee any catalyst for activity increases in the near-term.” It expects activity levels, pricing, and revenues to remain flat in Q1 2024 compared to Q4 2023. It will also continue to have an “asset and labor-light business.” Read more about this in our recent article here.

Revenue And EBITDA Margin Progressed In Q4: Quarter-over-quarter, NINE’s revenues increased marginally, by 2.5%, in Q4, while its adjusted EBITDA margin expanded by 180 basis points. Higher Stinger Dissolvable units sales volume, international tool sales, and market share gains through introducing the Pincer Hybrid Frac Plug improved its financial performance in Q4. NINE’s end market remained weak due to continued rig declines, particularly in the natural gas-heavy basins.

NINE’s Cash Flows And Negative Equity: NINE’s cash flow from operations increased by 1.7x in FY2023 compared to a year ago. As a result, free cash flow turned positive in FY2023. Due to negative shareholders’ equity, its debt-to-equity remained negative as of December 31, 2023. So, a high net debt ($293 million) and negative equity render the stock financially risky.

Thanks for reading the NINE Take Three, designed to give you three critical takeaways from NINE’s earnings report.  Soon, we will present a second update on NINE earnings, highlighting its current strategy, news, and notes we extracted from our deeper dive.