A Tailwind Expected In Q3: Although NINE Energy’s (NINE) financial results deteriorated in Q2, its management sees a silver lining in the relatively steady rig count and energy prices in late Q2. The completion activity and pricing levels appear to have stabilized. The management holds a positive medium-to-long-term outlook on natural gas. With this expectation, it anticipates maintaining steady revenue and profitability in Q3. Read more about this in our recent article here.

Revenue And EBITDA Margin Weakened In Q2: Quarter-over-quarter, NINE’s revenues decreased by 6.8% in Q2, while its adjusted EBITDA margin contracted steeply by 323 basis points. Much of the topline fall took place in the cementing business, which suffered from lower rig count. Revenues from the completion tool business also suffered due to sluggish activity in the US and internationally.

In addition, coiled tubing revenue was down due to low utilization in the Permian. The company recorded a $0.4 net loss per share in Q2, and the magnitude of the loss steepened compared to a quarter earlier.

NINE’s Cash Flows And Negative Equity: NINE’s cash flow from operations turned positive in Q2 2024 compared to a negative CFO a quarter ago. As a result, free cash flow also turned positive in Q2. Due to negative shareholders’ equity, its debt-to-equity remained negative as of June 30, 2024. Despite positive cash flows, 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.