What Nine Energy Service (NINE) Said on Its Q3 Earnings Call

Key Points

• Q4 outlook: Nine Energy expects revenue of $137 million to $147 million, roughly flat with Q3, but anticipates improved profitability from a mix weighted toward higher-margin cementing and international tools.
• Operating trends: Cementing benefited from stronger U.S. activity and market-share gains, while a large coiled tubing unit remained out of service and constrained results; the unit is expected back in December, though timing is uncertain.
• Investment and growth: Nine reported $46 million in total liquidity and expects full-year capital spending near the midpoint of its $20 million to $30 million range. Its expanded Completion Tools testing facility is expected to open in the first half of 2027 as the company prepares for stronger completions demand.

Nine Energy Service NYSEAMERICAN: NINE expects fourth-quarter revenue to be roughly flat with the third quarter but profitability to improve, as stronger demand for cementing and a shift toward higher-margin services help offset operating constraints elsewhere in its business.

The oilfield services company reported third-quarter revenue of $142 million and adjusted EBITDA of $8.3 million. President and CEO Ann Fox said improving U.S. activity and market share gains supported cementing results, while a coiled tubing unit remained out of service and international Completion Tools activity fell from the elevated level recorded in the second quarter.

For the fourth quarter, Nine projected revenue of $137 million to $147 million. Fox said the expected increase in profitability reflects a revenue mix tilted toward higher-margin cementing and international tools.

Cementing Gains as Coiled Tubing Unit Remains Down

Fox said sustained customer demand and market share gains helped the cementing business benefit from rising U.S. activity. The U.S. rig count increased to 599 at the end of the third quarter from 573 at the end of the second, she said.

Responding to an analyst’s question, Fox said cementing had produced some of its best margins in recent history and that she expected the business’s strength to continue into the fourth quarter. She described the current operating pace as sustainable.

CFO Heather Schmidt said the company would want to see pricing improve before considering growth capital in its service lines. Fox also said the oilfield services sector was “ripe for consolidation.”

A large-diameter coiled tubing unit was unavailable throughout the third quarter because of a previously disclosed maintenance issue. Fox said the outage constrained Nine’s ability to participate fully in the industry’s activity improvement and hurt that service line’s revenue and profitability.

The unit is expected to return to service in December, although Fox cautioned that timing remains a variable. She said Nine had been conservative in incorporating its return into fourth-quarter guidance because the unit must be prepared and brought back to customers, while supply-chain delays remain possible.

Cash Flow and Investment Plans

Nine ended the quarter with $16.1 million in cash and $29.9 million available under its credit facility, for total liquidity of $46 million. The company had $98.7 million in outstanding borrowings under the facility, Schmidt said.

Third-quarter operating cash flow was $4.7 million, while capital spending was $2.8 million. Year-to-date capital spending totaled $13.2 million, and Schmidt said Nine expects full-year spending near the midpoint of its $20 million to $30 million guidance range.

Schmidt said the company is watching its balance sheet closely while investing in the business. She pointed to spending on a Completion Tools facility, a new coiled tubing unit received earlier in the year and deferred maintenance.

Fox said Nine recently exited wireline operations in West Texas and North Dakota because those locations were not generating acceptable returns. The company has established a wireline presence in the Haynesville, where it also offers tools, coiled tubing and cementing services, she said.

Tools Facility and 2027 Outlook

Nine expects its new Completion Tools testing facility to become operational in the first half of 2027. Fox said it is designed to handle as many as six tests simultaneously, tripling current testing capacity, and to test tools at pressures exceeding 30,000 psi and temperatures above 500 degrees Fahrenheit.

The company is also commercializing new products, including Scorpion 2.0 and Stinger 2.0 tools for the Permian and Marcellus/Utica basins, and a 4.5-inch Scorpion Frac Dart for the Bakken Shale and Canadian markets. Fox said the products are at varying stages of commercialization and field trials, with early results encouraging.

International Completion Tools revenue declined sequentially in the third quarter as the prior quarter’s elevated activity did not recur. Fox said the business is subject to the timing of customer orders and projects, but described international markets as a bright spot for the fourth quarter and 2027.

Fox said cementing historically serves as an early indicator for completions activity and that Nine is preparing for improved completions demand in 2027. For the nearer term, she said higher U.S. rig activity and sustained commodity prices were contributing to a less pronounced fourth-quarter slowdown, though inflation remains a concern.

About Nine Energy Service (NYSEAMERICAN:NINE)

Nine Energy Service, Inc. is an oilfield services company that provides completion and production solutions to onshore oil and natural gas operators. Its services support the completion, stimulation, and maintenance of wells, particularly in unconventional formations. The company's offerings have included completion tools, wireline services, coiled tubing, cementing, and other well-intervention services. These products and services are designed to help customers prepare wells for production, improve well performance, and address operational requirements throughout the well life cycle.

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