Nine Energy Service ((NINE)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Nine Energy Service’s recent earnings call painted a picture of a challenging quarter, marked by significant revenue and market share declines. The company faced headwinds from rig count reductions, pricing pressures, and operational delays in the Northeast. Despite these hurdles, there were bright spots, including international revenue growth and technical achievements in the cementing division. The outlook remains cautious, with expectations of continued challenges in the fourth quarter.
International Revenue Growth
International revenue for Nine Energy Service grew by approximately 19% over the first nine months of 2025. This growth was primarily driven by increased sales in key international markets, including the UAE, Argentina, and Australia. This positive trend highlights the company’s strategic focus on expanding its global footprint amid domestic challenges.
Technical Achievement in Cementing Division
The cementing division of Nine Energy Service achieved a significant technical milestone by completing a landmark job in the Haynesville basin. The team successfully formulated a latex-based cement slurry that maintained stability and reduced pumping pressures under challenging conditions, showcasing the company’s innovative capabilities.
Positive Natural Gas Outlook
Natural gas prices remained mostly supportive during the third quarter, averaging around $3.03. Although this was a slight decrease from the previous quarter’s $3.19, it still provided a conducive environment for efficient operations, offering some relief amid broader market challenges.
Revenue Below Guidance
Nine Energy Service reported third-quarter revenue of $132 million, falling short of the initial guidance range of $135 million to $145 million. This shortfall was attributed to rig declines and pricing pressure, reflecting the broader challenges faced by the company during this period.
Decline in U.S. Rig Count
The U.S. rig count saw a decline of 43 rigs, or approximately 7%, from the first to the third quarter. This reduction significantly impacted activity levels and pricing, contributing to the company’s revenue challenges.
Domestic Market Share Losses
The completion tool division experienced market share losses due to customer consolidation and changes in completion designs. This shift in the domestic market landscape posed additional challenges for Nine Energy Service.
Decreased Revenue Across Divisions
Sequential revenue declines were reported across all service lines, with notable decreases in cementing (6%), wireline (15%), and completion tools (16%). These declines underscore the widespread impact of the current market conditions on the company’s operations.
Liquidity and Borrowing Base Reduction
The borrowing base under Nine Energy’s 2025 ABL credit facility is expected to be reduced by approximately $2.2 million monthly from October 31, 2025, to January 31, 2026. This reduction reflects the company’s ongoing financial adjustments in response to market conditions.
Net Cash Used in Operating Activities
For the third quarter, Nine Energy Service reported net cash used in operating activities amounting to $9.9 million. This figure highlights the financial pressures faced by the company amid the challenging market environment.
Temporary Headwinds in Northeast Operations
Operations in the Northeast faced temporary headwinds due to droughts, causing completion delays and inefficiencies. These regional challenges further compounded the company’s operational difficulties during the quarter.
Forward-Looking Guidance
Looking ahead, Nine Energy Service anticipates fourth-quarter revenue to range between $122 million and $132 million, with continued pricing pressures and typical seasonal slowdowns expected. Despite the challenges, the company remains focused on navigating the market dynamics and leveraging its international growth opportunities.
In summary, Nine Energy Service’s earnings call reflected a quarter fraught with challenges, including revenue shortfalls and market share losses. However, the company demonstrated resilience through international revenue growth and technical achievements. As Nine Energy navigates the current market landscape, it remains cautiously optimistic about its strategic initiatives and future prospects.