Management highlighted substantial pricing and activity headwinds in oil-weighted basins, especially the Permian, which has historically provided approximately 40% of revenue and proved vulnerable to rig declines and price pressure. Despite these challenges, the wireline and completion tools segments delivered revenue growth, supported by volume gains in the Northeast and international traction. Ann Fox emphasized the company's focus on growing its international market share, particularly in Argentina and the Middle East, which are expected to deliver full-year 2025 revenue above 2024, despite the lumpy nature of orders.
[Outlook]
The company projects a decline in both revenue and adjusted EBITDA for Q3 2025, with expected revenue between $135 million and $145 million. This is due to anticipated ongoing calendar gaps, completion delays, and lower pricing in oil-linked regions. Ann Fox highlighted the potential for additional rigs to exit the market, particularly from private operators, if commodity prices decline further. However, there is an expectation of increased activity in Q1 2026, especially with certain customers in the Permian.
[Financial Performance]
- Q2 2025 revenue: $147.3 million, reaching the upper end of original guidance.
- Adjusted EBITDA: $14.1 million.
- Total liquidity: $65.5 million as of June 30, 2025.
- Completion Tool Revenue: $37 million, a 9% increase.
- Wireline Revenue: $33 million, up 11%.
- Cementing Revenue: $52.2 million, down 9%.
- Coiled Tubing Revenue: $25.1 million, down 16%.
- Capital Expenditures: $6.1 million in Q2, with a full-year budget of $15 million to $25 million.
[Q&A Highlights]
Question 1: Did you mention that some private E&Ps may temper their work? Is this based on firm discussions with customers, or is it your view based on commodity prices?
Answer: Ann Fox explained that the expectation is based on the understanding that if commodity prices decline significantly, private operators tend to react more quickly than public ones. The commentary is more about the potential for a commodity price-driven reaction from private operators, who are typically more agile in adjusting their activities.
Question 2: Do you have any visibility into Q4 activities, and have customers mentioned their plans?
Answer: Ann Fox stated that while there is no specific visibility into Q4, customer conversations have indicated increased activity in Q1 2026, which is standard with budget refresh. This increase is relative to certain customers in the Permian, compared to activity levels in Q2.
Question 3: Can you highlight the international sales performance in the first half of 2025 compared to 2024?
Answer: Ann Fox noted a 20% increase in international tool revenue in the first half of 2025 compared to the same period last year. The growth is driven by increased sales of multi-cycle barrier valves in the Middle East and overall plug sales. The company expects to be up year-over-year internationally, although the exact increase is hard to predict due to the lumpy nature of orders.
Question 4: Can you provide more details about the new completion tools facility?
Answer: Ann Fox described the facility as being over 30,000 square feet, located next to their assembly and manufacturing location in Jasper. It will feature multiple test wells with various pressures and temperatures, making it a state-of-the-art completion tool testing facility in the US. This facility is crucial for both domestic and international customers, allowing immediate testing and results for fielded tools.
Question 5: With private operators in gassy markets potentially increasing activity, is there less procurement rigor compared to larger public peers, and does this affect margins?
Answer: Ann Fox noted that smaller private operators are often more operationally driven and grant their engineers autonomy to choose the best service lines and vendors. This can lead to better efficiency in the field and potentially higher margins for Nine Energy. The gas markets, particularly in areas like Haynesville and the Northeast, are favorable for the company, and they are optimistic about the future of the natural gas market.
Question 6: What is driving the increase in remedial wireline market share?
Answer: Ann Fox attributed the increase to strategic efforts made a few years ago to diversify the top line from the fluctuations of pump-down work. The leader of the business is well-versed in both pump-down and remedial wireline operations, which has contributed to the growth in market share.
[Sentiment Analysis]
The tone of the management was cautiously optimistic, acknowledging the challenges posed by pricing pressures and rig declines, particularly in the Permian Basin, while expressing confidence in the company's strategic initiatives and international market growth. Analysts were focused on understanding the company's visibility into future activities and the potential impact of commodity prices on private operators.
| Metric | Q2 2025 | Q1 2025 |
|---|---|---|
| Revenue | $147.3 million | $138 million - $148 million (guidance) |
| Adjusted EBITDA | $14.1 million | Not provided |
| Total Liquidity | $65.5 million | Not provided |
| Completion Tool Revenue | $37 million (+9%) | Not provided |
| Wireline Revenue | $33 million (+11%) | Not provided |
| Cementing Revenue | $52.2 million (-9%) | Not provided |
| Coiled Tubing Revenue | $25.1 million (-16%) | Not provided |
| Capital Expenditures | $6.1 million | $4.3 million |