Nine Energy Service Projects Q3 Revenue Between $135M and $145M Amid Market Uncertainty and Global Expansion

Key Highlights from Nine Energy Service’s Q2 2025 Earnings Call

Nine Energy Service (NINE) reported strong performance in the second quarter of 2025, with revenue reaching $147.3 million, hitting the upper end of its guidance despite significant rig declines. CEO Ann G. Fox emphasized that the company's Completion Tool and Wireline businesses drove growth, with Completion Tool revenue increasing by approximately 9% and Wireline revenue rising by about 11%. Additionally, International Tools revenue saw a notable increase of around 20% in the first half of 2025 compared to the same period in 2024, attributed to multi-cycle barrier valve sales in the Middle East and higher plug sales.

Fox expressed optimism about international market opportunities, noting that the Permian Basin, which historically contributes about 40% of total revenue, experienced significant declines, leading to pricing pressures across service lines and negatively affecting earnings. The CEO outlined several strategic initiatives, including gaining market share, investing in R&D, expanding the International Tools business, constructing a new Completion Tools facility, and exploring expansion into new geographies.

Financial Performance Overview

CFO Guy Sirkes provided detailed financial insights, stating that as of June 30, 2025, the company had $14.2 million in cash and $51.3 million in availability under its revolving credit facility, resulting in a total liquidity position of $65.5 million. Q2 revenue totaled $147.3 million, with an adjusted gross profit of $25.8 million. General and administrative expenses for the quarter were $13.9 million, and capital expenditures (CapEx) reached $6.1 million.

The adjusted EBITDA for Q2 was $14.1 million, with net cash provided by operating activities amounting to $10.1 million. Segment highlights included Cementing revenue of $52.2 million, Wireline revenue of $33 million, Completion Tool revenue of $37 million, and Coiled Tubing revenue of $25.1 million. The company also recorded a $0.3 million tax benefit year-to-date, with a $0.5 million discrete tax benefit in Q2.

Outlook and Strategic Focus

Fox projected Q3 revenue to be between $135 million and $145 million, expecting both revenue and adjusted EBITDA to decline compared to Q2 due to full-quarter realizations of activity and pricing declines made throughout Q2. She mentioned the possibility of additional rate reductions from private operators in the back half of the year, emphasizing continued focus on cost management and asset flexibility.

The full-year CapEx budget remains unchanged at $15 million to $25 million. Management highlighted a shift in strategic focus toward international growth, supported by a 20% increase in first-half International Tools revenue and ongoing investments in a new Completion Tools facility. The company is confident in its international and gas-levered markets but remains concerned about oil-levered basins and private operator activity.

Analyst Q&A and Market Sentiment

Analysts raised questions about visibility into future quarters, with Fox stating that there is no clear visibility into Q4, though customer conversations suggest increased activity in Q1. Discussions also centered on international sales trends, with Fox noting a 20% year-over-year increase in the first half and projecting further growth for the full year.

The new Completion Tools facility, described as the largest state-of-the-art testing facility in the U.S., is expected to open next year. Fox also explained that market share gains in remedial Wireline resulted from a strategic push over recent years and strong leadership.

Risks and Challenges

Management identified ongoing challenges such as pricing pressure, particularly in the Permian Basin, and significant rig declines impacting all service lines. Fox warned about potential activity reductions by private operators if commodity prices fall further, highlighting risks like calendar gaps, completion delays, and more white space. Tariffs and global economic uncertainty remain headwinds, with mitigation strategies including cost reductions, asset redeployment, and prioritizing international growth.

Final Takeaway

Despite Q2 results aligning with the upper end of guidance, driven by strong execution in natural gas and international markets, Nine Energy Service anticipates a decline in Q3 revenue and adjusted EBITDA due to persistent pricing pressure and activity reductions, especially in oil-levered basins like the Permian. The company remains focused on cost discipline, international expansion, and technological investment while acknowledging ongoing market volatility and uncertainty.