Nine Energy Service, Inc. (NYSE:NINE) Q3 2019 Earnings Conference Call - Final Transcript

Nov 11, 2019 • 10:00 am ET


Nine Energy Service, Inc. (NYSE:NINE) Q3 2019 Earnings Conference Call - Final Transcript


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Greetings. Welcome to Nine Energy Service 2019 Third Quarter Earnings Call.

[Operator Instructions]

At this time I will turn the conference over to Heather Schmidt Vice President of Investor Relations. Mr. Schmidt you may now begin.

Heather Schmidt

Thank you. Good morning everyone and welcome to the Nine Energy Service earnings conference call to discuss our results for the third quarter of 2019. With me today are Ann Fox President and Chief Executive Officer; and Clinton Roeder Chief Financial Officer. We appreciate your participation. Some of our comments today may include forward-looking statements reflecting Nine's views about future events. Forward-looking statements are subject to a number of risks and uncertainties many of which are beyond our control. These risks and uncertainties can cause actual results to differ materially from our current expectations. We advise listeners to review our earnings release and the risk factors discussed in our filings with the SEC. We undertake no obligation to revise or update publicly any forward-looking statements for any reasons. Our comments today also include non-GAAP financial measures. Additional details and a reconciliation to the most directly comparable GAAP financial measures are also included in our third quarter press release and can be found in the Investor Relations section of our website.

I will now turn the call over to Ann Fox.

Ann G. Fox

Thank you, Heather. Good morning everyone and special thank you to all of the veterans for their service for the country. Thank you for joining us today to discuss our third quarter results for 2019. This quarter revenue fell below management's original guidance and adjusted EBITDA fell within the range of management's original guidance. The revenue was below guidance due primarily to the sale of our well services division in which we lost a month of contribution and the closing down of our wireline operations in Canada which I will speak to more later in the call. Despite market conditions weakening throughout the quarter we increased cash flow from operations by over 6x quarter-over-quarter and our cash position is up significantly to $93.3 million as of September 30. We expect our cash generation to remain strong through the remainder of the year and into 2020. We also anticipate total capex to be down by over 60% in 2020. Company revenue for the quarter was $202.3 million. Net loss was $20.6 million which included a loss on the sale of our Production Solutions segment of approximately $15.8 million and adjusted EBITDA of $24.2 million, basic earnings per share was negative $0.70 adjusted net loss for the quarter was $4.7 million or negative $0.16 per share. ROIC for the third quarter was 4%.

The market was challenged in Q3 and worsened throughout the quarter. Our customers remain extremely focused on staying within capital budget prompting many operators to scale back or slowdown activities in the second half of the year to ensure they meet or come in under their budget. With that many of our competitors are acting irrationally from a pricing perspective to gain market share.